WINDHOEK – After surviving negative economic growth for the last two years, the Minister of Finance expects the worst effects of the recession to be over but has cautioned that the prolonged slump still calls call for comprehensive and targeted actions by both government and the private sector despite the expectation of moderate growth in the Namibian economy this year.
One of these targeted actions is to emphasise that public revenue performance is an important enabling factor during this period to enable a more supportive fiscal policy. Speaking at the Ministry of Finance’s first staff meeting for the year on Thursday last week, Calle Schlettwein noted that while some of the revenue collection targets are on track or even surpassed targets, concerns remain on especially corporate income taxes on account of weak demand conditions.
“Targeted revenue collection efforts, hand in hand with a visible taxpayer education should be an active program for each regional office of the Receiver. Tax policy reforms which plug tax avoidance schemes should be prioritised in the greater scheme of the tax amendments,” said Schlettwein.
These calls from the finance minister come after the new Integrated Tax Administration System (ITAS) was recently launched on January 17, 2019 by the relatively new semi-autonomous Namibia Revenue Agency (NamRA). The integrated system offers new service innovation as it transforms the ease of paying taxes through cutting-edge electronic filing that allows taxpayers to file the returns from their offices and homes, thus reducing compliance cost and enhancing competitiveness.
The NamRA reform is by far the largest institutional reform undertaken by the finance ministry. At the beginning of December last year, Schlettwein commissioned the NamRA Board of Directors to spearhead the transitional arrangements for the new institution with the support of the Revenue Agency Task Team.
Other targeted fiscal actions include interventions to boost inclusive growth and create jobs, particularly for the youth. According to Schlettwein, the policy mix for the next budget and over the medium term must be aimed to support a new sustainable growth trajectory more broadly shared and tackling the structural constraints in the domestic economy while promoting the flow of investment.
Also, limited fiscal space requires that non-productive spending continues to be kept at the bare minimum to enable realignment of resources to productive uses in the economy, while the wage bill containment must remain an important reform, underpinned by intervention measures to enhance productivity and internal efficiency.
“We should not compromise on the standards of excellence for financial management, data quality and financial accountability. The audited financial statements should reflect our adherence to these standards,” said Schlettwein. Furthermore, he cautioned that the downside risks to the domestic economy have to be seen in the wider context of the regional and global economy. At the global level, the growth forecast for 2019 has been revised downward from 3.7 percent to 3.5 percent, mainly due to the repercussions arising from the trade war between the United States and China that holds the risk of a slowdown for the Chinese economy and the resultant low demand for global commodity exports.
This, said Schlettwein, does not augur well for multilateralism and global trade, which is now projected to slow down.
He noted that for the Sub-Saharan African region, growth is projected to rise to about 3.5 percent over the next two years, mainly led by the economies of East and West Africa as well as oil exporters.
“The prospects for Southern Africa are not as robust and the potential drought spell this year would weigh on the agricultural sector in the region. Growth for South Africa is projected to be positive but low, while Angola is also recovering thanks to relatively better oil prices,” Schlettwein stated.
“At the economy-wide level, we maintained our national credit rating at investment grade and the sovereign credit rating at one notch below investment grade as revised two years ago. Our rating on corruption has improved and media freedom is among the best in Africa and globally. But we need to keep abreast of implementing reforms which improve our competitiveness and the ease of doing business,” Schlettwein concluded.
2019-01-28 09:47:03 23 days ago