21 February 2013

Namibia: Analysts Take On 2013/14 National Budget

Windhoek — There are as many diverse views as there are analysts and economists on what to expect from the Minister of Finance Saara Kuugongelwa-Amadhila when she tables the 2013/14 national budget in Parliament next week Tuesday. This is what they have to say on the general budget and the Targeted Intervention Programme on Employment and Economic Growth (TIPEEG).

James Cumming - Financial analyst at Simonis Storm Securities:

"We expect the minister to continue to support development programmes within the Namibian economy, however we also think there will be more emphasis on implementing the programmes through parastatals than directly. We have already seen the escalation in the priority of developing the Kudu gas field by Nampower, likewise for Namport which is expanding its capacity. Another area that we feel can deliver growth is for the ministry to expedite tax, particularly VAT, refunds. Companies waiting for refunds either have to wait for the refund before spending it or need to borrow funds, which incurs interest charges. When a company is refunded, it spends the money on stock, salaries, business development, etc., which in turn generates additional VAT or income tax revenue for the government by at least the refunded amount, as well as generating business activity and the associated multiplier effect. TIPEEG projects achieved an execution rate of 87 percent in 2012 and an expected rate of 66 percent for 2013, which has not been satisfactory. We will have to wait to see how the minister approaches this. There is definitely upward pressure on the deficit. The 2011/2012 deficit was 11.2 percent, while the 2012/2013 deficit was forecast to be 4.6 percent, but we think it will actually come in between 6 and 8 percent."

Daniel Motinga - Economist and senior manager for research and development at FNB Namibia Holdings:

"TIPEEG has not delivered on the job front as expected. So no surprise there. My only worry is what has the Ministry of Finance and the National Planning Commission learned from the TIPEEG challenges? They must fix these and move on. We need to spend on infrastructure with a long-term view. There is a need for the minister to keep tabs on the implementation of the capital budget. I would hope that there would be concrete plans to recapitalise the transport and logistics sector to dovetail with the expectations of NDP4. TransNamib, the Road Construction Company (RCC) and Namport should be priorities. I also suppose government will look at the reconfiguration of players in the road infrastructure space. There is a need to consolidate the admin and operations of the RCC, Roads Authority and the Road Fund Administration. There are clear synergies to be had. I am afraid, if this realignment does not take place the Fourth National Development Plan (NDP4) would be a pipedream."

Graham Hopwood - public policy analyst and director of the Institute for Public Policy Research:

"TIPEEG is supposed to be a three-year programme ending at the close of this budget year - 2013/14, so I would expect the major assessment of its effectiveness to be made only later in 2014. It is hard to gauge how successful TIPEEG has been so far as not much information is released about the progress of TIPEEG projects and the number of jobs created. In the interest of transparency the National Planning Commission should release quarterly reports on TIPEEG that the Director General Tom Alweendo delivers to the Cabinet Committee on Overall Policy and Priorities. I hope that the Minister of Finance will give a detailed mid-point accounting of TIPEEG in her budget speech."

Martin Mwinga - Independent economist:

"You may recall that from day one, I never agreed with TIPEEG, and I pointed then at the risks that the nation will face by implementing the programme. Among the risks I highlighted then was that TIPEEG in its current form was not delivering in terms economic growth and job creation. Namibia did not need such type of programme, the country needed and still needs a programme that addresses the productive capacity of the economy. Address production, since the infrastructure that Namibia had at the time, was and is still enough to support high economic growth and job creation. TIPEEG was far divorced from what was initially agreed in government through the Swapo Manifesto and NDP3. Someone in government was trying to copy the example of the USA, Europe and other countries that implemented expansionary public works and infrastructure expenditure to fight cyclical unemployment. Yes, those countries faced cyclical unemployment and that intervention measure was appropriate. Namibia did not face cyclical unemployment and the country's main challenge is structural unemployment, and short-term fiscal expansionary policy through TIPPEEG was not the right solution. It brought more confusion and posed implementation challenges, because people were implementing a wrong programme."

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