Minister of Finance and Economic Affairs Simplex Chithyola Banda on Wednesday presented the 2024/2025 Mid-Year Budget Review Statement, revealing an increase in total expenditure to K6.04 trillion from K5.99 trillion.

Chithyola Banda who described the mid-year financial plan as ‘sacrificial’ said the intention is to get the financial status of the country back on track.

Among other notable changes, the minister has removed Value Added Tax waivers on import of vehicles for the president, vice president, former presidents, MPs, judicial officers and other senior government officials.

“Once this VAT bill has been passed, these privileged individuals will now pay VAT when purchasing duty-free motor vehicles,” he said.

He further stressed on the collective will from other members of Parliament and the nation at large saying it is a sacrificial initiative that affects people in the high-income bracket to be implemented and manifested.

“I wish to mention that there is a need for collective will for us to make our economy recover. As such, the President has guided that we all make our fair contribution towards revenue that the government needs at the moment.

“As such, it should be noted that this measure affects people in the high-income bracket, such that the removal of the VAT waiver is a sacrifice and a clear testimony to the commitment to fiscal consolidation for the betterment of all Malawians,” he said.

Meanwhile, the opposition Democratic Progressive Party says implementation of the revised 2024/2025 budget will be hard as some of the austerity measures are practically impossible.

DPP Spokesperson on Finance Joseph Mwanamvekha says the implementation of the budget will face challenges with the tough economic situation the country is facing.

He adds that some of the measures, like the removal of the car import tax waiver for privileged individuals, will not have any impact as most of the concerned people have already bought vehicles.

Speaking to Malawi News Agency (MANA) Secretary to the Treasury Betchani Tchereni claimed that the 2024/2025 budget could have been reduced by up to K10 billion if certain adjustments had been made.

Tchereni was commenting on the reasons behind the rise in budget estimates, despite earlier assurances by President Lazarus Chakwera that this year’s financial plan would be guided by strict austerity measures.

Tchereni attributed the increase to numerous funding requests submitted to the Ministry of Finance by various sectors and stakeholders, including demand for essential public services, disaster response and economic recovery interventions.

Under the review, the government also plans to fully implement electronic excise tax stamps, establish a voluntary tax compliance window for motorcycle operators, and expand electronic payments to reduce leakages in revenue collection.

“These measures reflect our collective resolve to ensure economic recovery and resilience. We all have a role to play in rebuilding our economy for a better tomorrow,” Banda added.

(Additional reporting by MANA reporters Martha Rukunya and Austin Kananji)