WINDHOEK – Economic analysts were generally pleased with the budget tabled yesterday, while politicians too were impressed with the budget allocations, saying it could improve service delivery if executed as planned.
Analysts placed emphasis on implementation of the budget, pointing at last year’s execution rate of 98.2 percent, which they said is a much better utilisation rate compared to 95.5 spending rate in the previous year.
The observation echoed the pre-budget statement by President Hage Geingob during Cabinet opening yesterday, where he urged ministers to work hard in line with ministerial guidelines and roles.
“If there are ministers who disagree with these guidelines or have any doubts about their role, it is best for such individuals to do the honourable thing and resign. I will even help them resign,” Geingob said.
“It is very impressive because the budget caters for the youth and elderly. It is really a pro-poor budget. We congratulate the new President and his team,” said Republican Party Member of Parliament Clara Gowases, adding: “We have the ministers capable of implementing this budget efficiently.”
Chief Investment Officer at Capricorn Asset Management, Floris Bergh, said while he agrees that the budget is pro-poor he does not necessarily agree that it is pro-growth. “It brings great comfort to see that Minister [of Finance Calle] Schlettwein is so comfortable within the fiscal environment and it is quite evident that he is a seasoned professional,” said Bergh.
This year’s budget proposes an expenditure outlay of N$67.08 billion for the 2015/16 financial year, equating to 40.8 percent of Gross Domestic Product (GDP), which represents a 7 percent nominal increase over the past year. For the Medium Term Expenditure Framework (MTEF), total expenditure is forecast to moderately increase to N$72.06 billion by 2017/18.
Bergh noted that it was necessary for government to rein in expenditure, as the spending of funds seems to be contained. “This is very suitable from a macro-economic perspective. Also, the lowering of the deficit is positive and good for the overall credit standing of the country. A stable macro-economic environment is crucial to promote a growing economy,” remarked Bergh. “Within the budget it sounds like they are addressing income distribution, particularly with the massive increase in old-age pensions and there is a drive for free secondary education. Through the macro-economic estimates of nominal Gross Domestic Product, it is clear that the Namibian economy is quite a bit bigger than previously thought. In nominal terms, it seems the economy has been growing quite nicely, which indicates an ideal environment in which the budget can be tabled,” said Bergh.
Meanwhile, Managing Director of IJG Securities Rome Mostert commented that the budget is definitely advantageous for the poor, specifically the 40 percent increase in old-age monthly pensions to N$1 000, which is expected to reach N$1 200 by the end of the MTEF. “On the revenue side of things the corporate tax and other taxes reaffirm Namibia’s position as an attractive investment destination. Also, the increase in expenditure is grounds for favourable growth forecasts,” remarked Mostert.
In terms of accelerating the diversification of the economy, Mostert feels the new Cabinet and new ministries pave the way to do this and that the budget is merely “a means to an end” to achieve diversification. “Generally, it is a very positive budget. I really like what I’m seeing. However, the fact that our spending on defence is more than what we are spending on education is a bit disappointing,” Mostert said.
Some opposition parties have questioned the Ministry of Defence’s allocation of N$7.2 billion. “We are not at war yet our defence allocation is so much. Namibia could do with a leaner, meaner and modernised army and it will still serve the purpose. I would have understood if more money was pumped into the police to motivate them by pushing up their salaries,” said DTA MP Vipuakuje Muharukua.
Muharukua said government must stop attributing increased spending on defence on “national security”.
Swanu president Usutuaije Maamberua lauded government’s decision to establish a revenue agency as well as implement a mid-term budget review strategy. “This will curb over- and under-expenditure because now we will have the capacity to review the budget halfway to see how government agencies are executing their funds,” he said.
NUDO president Asser Mbai said that the budget is a good one in principle. “It addresses the issue of poverty eradication among our elderly people.