18 February 2013

Namibia: Govt Runs Out of Cash

THE Ministry of Finance is desperately looking for additional funding to be able to pay pensions and disability grants for the remaining two months of the 20012/2013 financial year.

Apart from this unprecedented situation, the government finds itself between a rock and a hard place after it depleted the Contingency Fund long before the end of the financial year.

Now the Ministry of Finance has to explore ways to find an additional N$152 million so that pensioners can be paid for February and March.

Finance Permanent Secretary Ericah Shafudah confirmed to The Namibian that the Ministry of Labour and Social Welfare had requested the ministry to cover for a shortfall on the basic State grants, which amounts to more than N$216 million.

"We have approached the Cabinet with this request and are awaiting instructions to seek for the additional funding. However, we have already paid N$16 million from the Contingency Fund to cover for the pensions and grants for January," said Shafudah. According to her, the reason for the shortfall is a sharp increase in the number of pensioners and disabled people who were put on the payroll in the 2012/2013 financial year.

During the motivation of the budget vote of the Ministry of Labour and Social Welfare last year, the then Minister Immanuel Ngatjizeko said Government was paying social grants to 140 244 pensioners and 26 277 disabled people.

Ngatjizeko at the time warned that the number of beneficiaries continued to increase, and according to him 1 465 people on average apply for social benefits every quarter.

According to Shafudah, the money needed exceeds the amount left in the Contingency Fund, which is supposed to be kept aside for emergencies, and therefore other ways have to be found to cover for the shortfall of N$152 million.

"We have a constitutional obligation towards the old people and those with disabilities and will not have an option other than to raise funds to cover for the shortfall," Shafudah said.

An additional amount of N$48 million will be paid out of the Contingency Fund, which according to her will deplete the fund, leaving a shortfall of N$100 million for February and March.

In the meantime the government has also run out of money to implement the 8% salary increase for public servants agreed with the unions last year. Some ministries will not have enough money to pay the increased salaries for February and March. It was planned that this shortfall would be covered from the Contingency Fund, but given the Labour and Social Welfare request it would not be possible.

These ministries now have to use money allocated for capital projects to honour the salary increase for public servants.

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