When Calle Schlettwein tabled the national budget on Wednesday for the 2019/20 financial year, the fifth budget under President Hage Geingob’s administration, he did so with the full knowledge that the current domestic economic situation was the cause of hardships for many citizens.
Schlettwein admitted that the dire straits we find ourselves in could have been much worse if we had not gone ahead with the bitter-to-swallow pills called fiscal consolidation and austerity measures.
Where Schlettwein should be commended though is that the latest budget is targeted at stimulating economic growth by creating decent jobs and, further adjusting the public fiscal stance to sustainable and stable levels. Wednesday’s budget was as much about ensuring macroeconomic stability as it is about stimulating economic growth through project implementation and job creation.
The FY2019/20 budget provides and reinforces three-linked and interconnected fiscal policy actions. Firstly, the budget provides for a growth stimulus package, centred on increased magnitude of the development budget, enhanced resource allocation to the agricultural sector, youth and SME support. Secondly, its policy stance proposes a continued reduction in the budget deficit, consistent with the medium-term fiscal consolidation policy stance. Thirdly, it proposes timely implementation of enabling structural policy reforms to optimise outcomes through improved ease of doing business, business confidence and increased policy certainty.
This also includes tax policy and tax administration reforms which balance between promoting investment and revenue generation to support the successful implementation of the fiscal consolidation program.
Many an analyst has commended Schlettwein for taking the bold step to increases the development budget allocation by 42 percent, which places great emphasis on economic growth, enhancing infrastructure investment and crowding in private sector participation. The development budget increased to N$7.9 billion for 2019/20, from N$5.5 billion in 2018/19 and the minister issued a stern warning that this allocation must be protected against frequent reallocation and virements during the financial year.
Besides the massive increase of the development budget, it seems that Schlettwein has had to make difficult decisions to get the domestic economy back on track, mainly by resuscitating growth and jobs.
Additional allocations that are expected to result in much-needed growth and jobs includes project financing amounting to N$1.1 billion under the African Development Bank (AfDB) arrangement within the budget year, with own budget funding of N$831.9 million for logistics infrastructure for mainly rail and road, agricultural mechanisation and school infrastructure renovation. And, in collaboration with AfDB, as well as to encourage local contractor participation, construction projects will provide the option for 25 percent of the contract value to be reserved for local entities, of course through a competitive bidding process.
In addition, N$290 million was allocated to the crop and horticulture programme under the Ministry of Agriculture, Water and Forestry of which N$96 million is targeted for the Green Scheme Programme, through which many Namibians are employed and even more are dependent upon.
But, in a country plagued by severe and persistent drought, N$469 million was allocated for water generation and the infrastructure refurbishment programme. This, Schlettwein explained, is for increased productive capacity, increased efficiency and drastically needed job creation and to enhance water security.
Since it is well known that the youth constitute the majority of the country’s unemployed, Schlettwein allocated an additional N$15 million for youth entrepreneurship projects on top of N$9.5 million to support youth employment and self-employment under the National Youth Council. This substantial amount will complement youth-related projects under the Ministry of Sport, Youth and National Service as well as the support facilities at the Development Bank of Namibia and the Ministry of Industrialisation, Trade and SME Development.
While this budget, or any other budget for that matter, is not without its challenges, such as the bulging deficit and the escalating debt to GDP ratio, it does propose to make money available to spend and this spending is expected to eventually result in more infrastructure projects, the consequence of which will be more jobs that in turn will expectantly see positive economic growth.
New Era Reporter
2019-03-29 09:36:42 | 1 years ago