Smit calls for improved economic resilience …argues revenue windfall should prepare for shocks

Home National Smit calls for improved economic resilience …argues revenue windfall should prepare for shocks
Smit calls for improved economic resilience …argues revenue windfall should prepare for shocks

POPULAR Democratic Movement (PDM) parliamentarian and shadow finance minister, Nico Smit last week said despite the 2024/25 national budget being impressive, the additional liquidity has not been properly channelled. 

“Improving our resilience should have been the watchword. A responsible budget in my view, would have utilised the revenue windfall and the renewed vitality of the economy, to improve our resilience,” said the lawmaker.

Budget resilience is the ability to maintain financial stability and absorb unanticipated financial shocks. It is the concept that guides a budgetary committee to navigate uncertain times with confidence and peace of mind. A strong budget not only helps weather financial storms, but it also provides confidence and control over a financial destiny.

“I want to caution my colleagues in this August House that we are following a risky and dangerous budgetary path, one that we have traversed already once in the past, and which has wreaked havoc on the well-being of our citizens,” Smit cautioned.

The windfall, he argued, should have gone to improve funds and structures that are needed in times of calamity, like the next drought or the next pandemic.

Smit was reacting to the tabling of the national budget and the medium-term expenditure framework (MTEF), which forecasts spending up to the 2026/27 financial year, in the National Assembly last week. At the occasion, finance minister Iipumbu Shiimi tabled the country’s biggest budget to date that projects N$100.1 billion in government spending for the financial year 2024/25. 

Shiimi said due to resultant strong revenue performance, government saw it fit to expand the spending envelope to accelerate service delivery, address the most pressing needs and improve infrastructure development. The overall budget has increased by 12.4% from the revised estimates of the preceding year. 

Total revenues estimated stands at N$90.4 billion for FY2024/25, an increase of 11.5% from the revised estimates of the previous year. Over the MTEF period, revenue growth is projected to average 5%, reaching N$93.6 billion by the end of FY2026/27. 

Meanwhile, Smit contents the nominal budget and the subsequent two years of the MTEF, are inflation-driven. This, he asserted, is a risky form of budgeting since local inflation does not stem from any domestic pressures but are mostly transmitted to the Namibian economy through substantial import levels.

Furthermore, Smit took issue with the N$12.7 billion earmarked for the development budget, calling it “the biggest budget joke” considering, he argued, that N$3.2 billion of the total development budget comes from grants and loans.  Moreover, Smit admitted that finance minister Shiimi is particularly challenged with capacity in the civil service to execute projects and implement budget allocations.

However, Smit appreciated relief from adjustments to tax brackets, and the increase in the old age grant, but noted that not even a small family can be sustained on N$1400 per month, and that it is an unfortunate reality that ‘ouma (grandmothers)’ ends up looking after the children with inadequate contributions from parents. 

Meanwhile, responding to the recently tabled national budget, secretary general of the Trade Union Congress of Namibia (Tucna) Mahongora Kavihuha asked why grants for orphans and the vulnerable are hardly adjusted. 

“A concern that we have noted is the fact that it is usually only the pension grant for the elderly that is adjusted with almost ascertainable regularity while the other grants, such as for orphans and vulnerable are hardly ever adjusted with equivalent regularity. 

What explanation is there for this phenomenon?,” Kavihuha asked.