WINDHOEK - Finance minister Calle Schlettwein, yesterday told the nation that a total of N$1.18 billion has been freed up through expenditure cuts during the mid-year budget review process. Delivering his mid-year budget review statement in the National Assembly, Schlettwein said the funds saved comprises of N$176.32 million realised from the operational budget on personnel emoluments and N$999.59 million from the development budget.
This means that while close to a billion dollars is to be suspended from the development budget, the operational budget is increased by a similar amount, from N$52.24 billion to N$53.24 billion.
Overall, the finance minister stated that Namibia’s economic and fiscal environment has changed and remains dynamic.
Said Schlettwein: “Our economy, small as it is, remains resilient in challenging times. Current and medium-term economic growth are still projected to be positive, thereby establishing a coherent firm basis for the re-calibration of fiscal policy”.
“For the operational budget, internal savings were realised from personnel emoluments, thanks to wage bill management and vacancy freeze measures. For the development budget, freed-up resources are realised from capital projects with a slow implementation pace or yet to be implemented,” said Schlettwein.
Out of the N$1.18 billion realised, N$632.1 million is realised from the votes’ budgets with identified priorities for funding.
Savings
As such, a total amount of N$632.1 million, equivalent to 53.7 percent of the total realised savings, is proposed for internal virementation (moving from one section of the budget to another) within the votes’ budget.
“This internal virementation is to be effected within the provisions of the State Finance Act and it does not require consideration by this August House,” said Schlettwein.
He added that a total amount of N$544.2 million is realised from other budget votes as excess freed-up money for reallocation to areas experiencing urgent funding needs for the delivery of essential goods and services.
“The proposed reallocation is to meet essential needs for the smooth conduct of elections with further budgetary support to the Electoral Commission of Namibia and the Ministry of Safety and Security, needs in the basic education sector, health and social services in respect of procurement of pharmaceuticals, supporting funding needs of the Namibian Broadcasting Corporation, drought relief and social grants,” Schlettwein explained.
In addition, out of the N$1.18 billion freed-up funds, an amount of N$96.65 million is re-allocated to the ministry of agriculture for personnel expenditure, utilities and dry-land crop production, N$67.33 million is re-allocated to the drought relief programme under the Office of the Prime Minister; and N$88 million is allocated to the orphans and vulnerable children programme under the Ministry of Gender Equality and Child Welfare to cater for expanded coverage.
Additional resources from the freed-up funds will also be allocated to the Ministry of Home Affairs and Immigration for the visa stickers project, to the ministry of education for the recruitment of teachers, textbooks and the school-feeding programme.
Health support
Also, the ministry of health received N$210.72 million for pharmaceuticals and clinical suppliers as well as recruitment of health professionals and just over N$88 million is allocated to the Ministry of Poverty Eradication and Social Welfare for social grants.
“We have endured pain and we will have to remain determined to see through the very necessary economic transformation to bring about sustainable and inclusive growth. The pain of not moving forward towards shared prosperity is unbearable,” said Schlettwein.
Yesterday’s mid-term budget review was the fifth since its introduction in 2015.
The purpose of the exercise is to improve effectiveness of resource allocations during the financial year, to enhance the growth responsiveness of fiscal policy and to reaffirm the medium-term policy stance grounded on fiscal sustainability, a consolidation perspective that is evenly managed to give greater impetus to economic recovery, growth and jobs.
According to Schlettwein, the mid-term budget review and the medium-term budget policy statement places a high premium on achieving economic recovery, sustainable growth and strengthening fiscal sustainability as the necessary conditions for economic progress and social transformation.
He went on to explain that the review framework has three distinct policy actions; firstly that it frees up a resource envelope for re-allocation to alternative priority programmes within the appropriated expenditure ceiling.
“This is to enable optimal provision of services in areas where shortfalls are anticipated and to achieve enhanced development outcomes.”
Secondly, it ring-fences expenditure allocations to capital and development programmes as a way of enhancing growth consistent with sustainable fiscal policy.
Thirdly, it unveils an integrated economic recovery and growth stimulus intervention measures to support short-run economic recovery and sustainable economic growth in the medium and the long-term.
Schlettwein added that the local economy is projected to finally but gradually emerge from the prolonged recession in 2020 with a moderate growth rate of about 0.8 percent and about 1.3 percent by 2021, averaging 2.0 percent over the next Medium-Term Expenditure Framework (MTEF).
“On the demand side, we expect a moderate recovery in domestic consumption demand and other elements of final demand as some of the planned public and private sector investments come on line and the rebound of exports from mining activity,” he continued.
On the supply side, Schlettwein expects that the recovery will be similarly anchored by moderate positive growth in all main economic sectors, with projected recovery in the primary industry sector anticipated to perform better in the mining and agricultural sectors as temporary factors in the diamond subsector and rain prospects improve.
Further, growth in the secondary industries is projected to strengthen as the contraction in the construction sector eases, while tertiary industries are projected to post-moderate recovery as domestic demand gathers pace with positive effects on the wholesale and retail trade and real estates subsectors.
“While the economy is projected to recover in 2020 and over the next MTEF, the projected pace of recovery is low and insufficient to translate into real growth in per capita incomes,” Schlettwein cautioned.