Focus on Budget 2014/15 – A ‘steady as she goes’ budget, says Standard Bank economist

Home Business Focus on Budget 2014/15 – A ‘steady as she goes’ budget, says Standard Bank economist

WINDHOEK – “The broad thrust of the budget is overall good. But, over the medium term the government needs to ensure more bang for its bucks by focusing on an efficient, but streamlined civil service,” said Philip Clayton, Senior Manager of Country Risk at Standard Bank Group. He however questioned civil servants’ two years of significant salary growth. 

Clayton says that over the medium term Namibia’s economic progress is likely to continue to be fiscally sustainable and support inclusive growth. Although the Gross Domestic Product (GDP) growth is expected to be moderate, it is still expected to be above the world average in 2014.

He referred to the International Monetary Fund that found Namibia’s central government expenditure and wage bill from 2007 to 2011 was well over 40 percent, compared to the lower percentages of other developing countries such as Botswana, South Africa, Mauritius and Chile. Namibia’s public sector is large and is now hindering, and not helping, employment in Namibia, said Clayton. Considering the size of the public sector, he asked the rhetorical question: “Is the private sector being crowded out of job creation?”

He did however note a strong growth in recurrent and development expenditures, which is 26.7 percent year-on-year. The implementation rate, specifically in the recurrent expenditure is good. “Extending social grants is positive, even though no increases will be made this year, and there is a continued focus on improving tax efficiency,” said Clayton. He further commented that the financing of the deficit, mainly in the local market, would help to deepen and widen the local debt market. Furthermore, establishing an autonomous revenue authority is good in principle.

“An astonishing amount will once again be transferred to the state-owned enterprises (SOEs),” said Clayton. Over the Medium Term Expenditure Framework, transfers to the SOEs will be a staggering 16.3 percent of total recurrent spending. Clayton also shared concerns over the massive increase in recurrent expenditure that might lead to inflationary pressures, as well as the planned deficit of 5.4 percent, which he thinks is too large.


By Staff Reporter