The Namibian reports, “‘WE must live within our means.’ This was a theme that finance minister Calle Schlettwein expressed early in the mid-year budget review speech that he delivered in the National Assembly yesterday.
Seven months after tabling a budget providing for government spending totalling N$65 billion during the 2018/19 financial year, Schlettwein proposed a rearrangement of spending figures within the budget, while telling fellow members of parliament that two years of economic recession in Namibia have left public finances with limited capacity to stimulate faster economic growth.
Revenue projections will not allow the government to make significant increases in public expenditure, Schlettwein said.
He cautioned: “Taking on more debt is unsustainable. Aggressive domestic mobilisation through punitive tax increases is also not a viable option. Combined, these factors limit prospects for increased public spending in the short to medium terms.”
He added: “We must proceed to unlock opportunities for a more private sector-led growth, implement a more conducive policy framework and address binding constraints on the ease of doing business and national competitiveness more effectively. Investment-led growth instead of consumption-led growth is aspired [to].”
The budget review tabled by Schlettwein foresees total government spending, excluding the costs of servicing state debts, to amount to about N$58,5 billion during 2018/19 – the same level as projected in the main budget that was tabled in March. With government debts projected to amount to N$82,5 billion during the 2018/19 financial year – about 44% of the country’s gross domestic product – the main budget provided for interest payments of N$6,5 billion on the national debt during 2018/19.
Within the operational and development budget ceiling of N$58,5 billion, Schlettwein said, spending has to be rearranged, mainly to address shortfalls in critical services, especially in the social services sector.
The Ministry of Education, Arts and Culture, which received N$13,48 billion in the main budget, will be allocated an extra N$236,8 million to cater for the implementation of a new school curriculum and the recruitment of teachers, while the Ministry of Higher Education, Training and Innovation is to have N$189 million added to its budget of N$3,2 billion.
An additional N$175 million will be allocated to the Ministry of Health and Social Services, which received N$6,5 billion in the main budget.
The Ministry of Finance’s budget is to be increased by N$272 million, of which N$170 million is proposed to be allocated to the contingency fund “for funding priority needs arising from the 2018 land conference resolutions and drought relief commitments”, Schlettwein said.
The Ministry of Defence, which in the main budget was allocated N$5,9 billion for the 2018/19 financial year, is set to receive an additional N$124,5 million, “for utilities and transport related expenses”, while spending on veterans’ affairs is to be increased by N$99,8 million for the payment of monthly grants to war veterans, the minister also said.
With that increase, spending on veterans’ affairs will rise to N$708 million during the current financial year.
The Ministry of Information and Communication Technology’s budget is to be increased by N$99,7 million, for the operational expenses of the Namibian Broadcasting Corporation.
The biggest cut envisaged in the adjusted spending plans is in the budget of the Department of Transport, which is to be decreased by N$659 million, from N$3,4 billion to N$2,8 billion.
The Ministry of Urban and Rural Development’s budget is to be cut by N$290,5 million, from N$2,1 billion to N$1,8 billion, while the Ministry of Agriculture, Water and Forestry is in for a budget cut of N$179 million (from N$2,1 billion to N$1,9 billion).
The Ministry of Land Reform’s budget allocation is to be cut by N$110 million, from N$476 million to N$366 million.
Schlettwein said Namibia’s economy, which has been in recession since mid-2016, was expected to contract by 0,2% in 2018 after a contraction of 0,9% in 2017. Positive growth of 0,9% was expected in 2019, though, and growth was projected to average around 2,3% over the next three years, he said.
The government’s budget plans over the next three years would include goals of maintaining a budget deficit of no more than 4,4% of GDP in the 2019/20 financial year and having an average deficit of 3,6% of GDP over those three years, Schlettwein stated. At the same time, the aim would be to reduce the growth of total public debt after a peak of about 48,7% of GDP, he said.
The National Assembly is due to start discussing the budget review from Tuesday next week.”