The budget presented by the Finance Minister yesterday shows government's commitment to controlling public spending, infrastructural development, improving revenue collection, investing in productive sectors and rolling out services to the people, as well as developing safety net programmes for the poor. The minister must be commended for sticking to her commitment for three years running not to have introduced an additional budget, which was the case with all her predecessors. Deficit has come down from an all time high of 7.2 percent of the GDP in the 2003/04 financial year to 3.6 in 2004/05 and is projected at 1.1 percent for 2005/06. The minister deserves a pat on the back for this. However, she needs support and commitment from her Cabinet colleagues in achieving this. The worrying aspect reflected in the minister's motivation speech is the growth in the civil service, which according to her shot up by six percent over the past three years. It is imperative for the government to reduce the public service wage bill, which according to the minister's statistics is the highest in Africa at 14.8 percent of the GDP - double the average on the continent. The minister must be applauded for improved revenue collection, for both Value Added Tax and Income Tax through regular audits, where Finance officials in cahoots with individuals and companies had been defrauding the state of valuable resources. The country needs direct foreign investment and also needs to use local savings in the form of pension funds to stoke the engine of growth for investment in productive sectors for job creation. While the country requires substantial investments, pension funds continue to invest their funds offshore, particularly in South Africa. Perhaps time has come for the government to introduce effective legislation to control capital flight. The outflow of capital also has a negative effect on the country's trade balance. Another factor hampering Namibia to access international funds is its rating as a middle-income country, where it has to compete for funds on the international financial markets on the same terms as developed countries. The President's office together with that of the Director General of the National Planning Commission have been campaigning for this status to be reviewed, as it does not reflect the realities on the ground. The fight is not lost and they should continue to do so. Despite all odds, the country has achieved positive international credit rating, because of its sound economic policies and has started to reap fruits as was evident with the signing last week of a loan agreement between European Investment Bank and Old Mutual for infrastructural development projects in the country. The credit rating apart from having decreased borrowing rates will also improve funding prospects for both the private sector and the government. This is all as a result of the government's fiscal discipline and socio-economic policies. However, in the minister's words, "the temptation to, for short term gains, borrow at levels where the ability to service and redeem such debt is wanting should be resisted". Also demonstrating government's commitment to root out corruption and strengthen public accountability are the allocations to the Anti-Corruption Commission and the Office of the Auditor General. And finally we welcome the minister's announcement to review tax incentives to foreign companies to ascertain whether such policies benefit the country in the long run.
2006-03-20 00:00:00 12 years ago