Will Calle walk the budget talk?

26 October 2018 Author   CHAMWE KAIRA
Economists have largely reacted positively to the Mid-term Budget Review tabled in Parliament by Finance Minister, Calle Schlettwein, on Wednesday. 
The sentiment was that the minister had presented a good budget, but there were some concerns on whether the finance minister will implement his plans given past experiences.
‘Will he walk the talk?’ was the main concern of the economists and analysts who spoke to the Windhoek Observer after the budget review.
FNB Namibia economist, Namene Kalili, said the budget review did not have ‘many negative surprises.’
“It did not contain a lot of negative surprises. It’s okay.”
Kalili said what impressed him the most was the announcement by Schlettwein that the government wants the private sector to drive growth unlike in the past where growth was government-led.
Kalili said he is positive that the economy will register positive growth next year.
“I expect the economy to register positive growth. It will not be as high as it was four years ago, but it will be positive growth.”
Investment firm, Cirrus Capital, described the budget as a ‘positive package’ of requirements to rejuvenate growth in the Namibian economy.
“However success will ride on the detail and implementation,” according to the investment firm.
Economist Mally Likukela told the Windhoek Observer that while he agreed that the budget review demonstrate government's intention to protect and support social services, he was against suspending long-term growth-enhancing funding.
“By withdrawing N$1.8 billion from the developmental budget directly into operational budget, this demonstrates the government’s lack of seriousness toward infrastructure development - the backbone of economic growth.”
He said instead of suspending funds from the capital budget due to low implementation, the government could simply deal with the main cause of low implementation rather than re-directing the much-needed capital funding into operational expenditure - where no return on investment is guaranteed.
Likukela said the government will not succeeded in boosting tax collection through the tax proposals announced in the budget review because the private sector is under pressure due to the slowdown in the economy. 
He said lack of accountability, corruption, poor work attitude in the public sector and poorly designed procurement policies will continue to undermine the minister's wish for a more efficient budgeting.
Eloise du Plessis, Head of Research at PSG Namibia, said the budget review ‘said the right things without much detail or resolution on anything.’
“There is still no finalisation on tax changes and it is still being discussed by the working group. The Public Procurement Act and the Investment Promotion Act are the two pieces of legislation that are supposed to boost investment in Namibia from outside and stimulate local business. Both are still under review,” she said.
“A positive development is to increase tax-deductible pension contributions to encourage local savings. The forum for stakeholders to discuss the implementation of major projects that are not yet implemented indicates that the problem is acknowledged. Urgent action is, however, necessary,” she said.
Du Plessis said the N$1.8 billion that can now be reallocated from the development budget because it is not spent is not something to be celebrated.
“The development budget has been cut again and again over the last three years to fund day-to-day government spending. It is not sustainable. An example of this is the N$138 million that has been removed from the construction and maintenance of schools to salaries,” she said.
Du Plessis said implementation of measures will make it easier for business, government spending and other types of funding.
“The question is which of these goals will be achieved?”
IJG Namibia said the budget review is very reflective of the trying economic times the country is facing at present.
“The revenue projections and revisions are more aligned and attest to the downward pressures on revenue that are at play. Government is only likely to achieve the projected contractions in the budget deficit through continued austerity measures,” the firm said.
IJG said a lack in implementing structural reforms and not providing a conducive business environment coupled with policy uncertainty is unlikely to change the prospects for increased revenue in the near-term.
“Securing funding for the budget deficit, however, is of less concern, as shown by the strong participation at primary auctions and the continental line of credit from the AfDB,” the firm said.
In his review, Schlettwein said the reallocations are targeted at addressing shortfalls experienced in various frontline services, with the social sector taking up 62.7 percent of the total reallocation or some N$702.8 million.
The public safety sector received 16.4 percent or some N$184.5 million, the infrastructure sector 11.4 percent or some N$127.5 million, economic sector 8.3 percent or some N$93.0 million, while the administrative sector received about 1.2 percent or some N$13 million.
The prominent reallocations were the Ministry of Basic Basic Education, Art and Culture which was allocated N$236.9 million while N$189.3 million was allocated to Higher Education, Training and Innovation as subsidy to support programs of higher learning and training.
He said N$175.1 million was allocated to Health and Social Services to cater for intake of health professionals, allocation to the Special Fund and procurement of pharmaceuticals under Namibia Institute of Pathology. Defence was allocated N$124.5 million for utilities and transport related expenses.
“The overall outcome of the Mid-Term Budget Review is limited to reallocations within and between votes, without any additional expenditure in the overall non-statutory expenditure ceiling, which remains at N$58.5 billion,” Schlettwein said.


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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