Government will no longer cough up for the educational allowances for children or dependents of Namibian diplomats effective 1 April 2021. In the past government paid for 85% of school, allowances for dependents of diplomats while the parents were responsible for the remaining 15%.
However, an internal ministerial memo from executive director in the finance ministry Ericah Shafudah dated 18 December 2020 and seen by New Era, informed Namibian diplomatic missions around the world of the new directive aimed at stabilising fiscal indicators from the start of the next financial year, which commences on 1 April.
“Therefore, as you are compiling your final expenditure proposals for the next financial years, you are advised to suspend tuition fees payment from the projected expenditure ceilings.
In other words, the Ministry of Finance hereby directs that any contribution towards diplomats’ dependents’ education allowance will cease as from 1 April 2021. This directive is final,” reads the communique from Shafudah.
In the letter titled ‘Technical Budget Consultations and Expenditure Reforms for the 2021/22 Financial Year’, Shafudah noted that Namibia’s total revenue is projected to be significantly lower in 2021/22 compared to the current financial year.
“The outbreak of Covid-19 and its consequent negative impact on projected revenue has contributed to the need for fiscal indicators to be stabilised starting from the next financial year. With this in mind, tough decisions on some expenditure items have to be made,” Shafudah stated.
In light of these tough decisions, the finance ministry, in consultations with relevant government institutions identified fiscal reforms that include expenditure modifications on the State medical aid, the wage bill, and a review of Foreign Service Staff Rules, amongst others.
In the letter, Shafudah explained that these reforms are expected to be finalised by the end of 2021/22 financial year but as a matter of urgency, Treasury identified other expenditure measures to be enforced effective 1 April 2021 and that has already been communicated to all offices, ministries and agencies.
Furthermore, Shafudah requested Namibian diplomatic missions to furnish the finance ministry with records of payments of the 15% educational allowance contribution per mission over a period of five years.
“Should there be those who have not contributed, you are advised to apply the State Finance Act, 31 of 1991 and collect what is due to the State by 1 April 2021,” Shafudah stated.
Shafudah also urged the head of missions abroad to revisit rental fees (accommodation for officials) to ensure that reasonable amounts are agreed upon for new contracts taking into accounts the negative effects of Covid-19 on the fiscus.
“Finally, the ministry is requesting your good offices to provide us with the list of rentals paid for by GRN on behalf of diplomats. Should there be any co-contribution by diplomats, kindly provide that information per mission,” the letter reads, concluding that the requested data should reach her office by 19 January 2021.
When approached for comment, finance ministry spokesperson Tonateni Shidhudhu said the memo was meant for the ministerial eyes only, adding it formed part of consultations in the build up to the tabling of the 2021/22 national budget.
Commenting on the ministerial directive, local economist, Mally Likukela said it is a case of too little too late.
“Government should have taken actions to ensure minimal fiscal stress as a result of Covid-19 much earlier such that even when the pandemic hit us, we would be in a position to absorb the impact. The measures proposed to be taken now won’t do much to shield the fiscus as these expenditures are relatively minimal compared to other expenditure lines on our budget,” said Likukela.
He added that at this point in time, budget cuts will do more harm than good as the economy needs every expenditure boost it can get from government.
“What government needs to do is to streamline and redirect expenditures towards those expenditure items with larger multiplier effects, such as direct local procurement, public works projects and agriculture support and related activities. What the economy currently needs is a stimulus package, not a consolidation package. All countries are embarking on stimulus programmes,” Likukela added.