27 February 2013

Namibia: A Huge Budget for Ordinary People

Photo: http://www.newera.com.na
A confident Minister of Finance Saara Kuugongelwa-Amadhila increased government spending to a record N$47.6 billion for the 2013/14 financial year.

Windhoek — A confident Minister of Finance Saara Kuugongelwa-Amadhila increased government spending to a record N$47.6 billion for the 2013/14 financial year.

And without batting an eyelid the minister tabled a budget that, as of today, would hopefully bring smiles of relief and joy to thousands of civil servants, because the increase caters for salary increases, as well as the cost of the job evaluation and re-grading exercise - an issue that has been pending for too long.

The minister also increased social grants by an additional N$50 for pensioners and other vulnerable categories of people such as orphans and the disabled in the N$3.9 billion budgeted for the vulnerable for the next three years, while the unemployed also came in for consideration with N$6.6 billion set aside as additional to total expenditure.

"In this budget we have increased the incentives to create employment, we have chosen to decrease the burden of taxes, and we have given our families and our pensioners more support," said Kuugongelwa-Amadhila, just after she called on technocrats to ensure "the effective implementation of programmes to realise intended outcomes and ripple effects in the economy."

Kuugongelwa-Amadhila introduced the budget to parliament by first assuring members that the increases in spending, as well as in the budget deficit in relation to the Gross Domestic Product (GDP), are based on the foundation of recent successful fiscal policies.

"In this budget ... we are taking major steps forward to build on the strong foundation we have laid since independence. The reforms we present [in this budget] are substantial, responsible, and necessary," said a confident Kuugongelwa-Amadhila, adding that the country retained a relatively strong fiscal position although not as strong as four years ago before the onset of the global financial crisis.

Government spending in the 2013/14 national budget increases by nearly 18.7 percent from last year's N$40.2 billion. The expenditures are going to be funded from an estimated revenue base of N$40.1 billion for the year, which is higher than the estimated revenue collections of N$37.1 billion in the previous financial year. This year's budget will result in a deficit of 6.4 percent of GDP, from the current 2.8 percent estimated in the previous year.

However, the deficit as a percentage of the GDP is well within the government's self-imposed target of 35 percent. The deficit increases from N$3 billion in 2012/13 to an estimated N$7.4 billion and would average around N$5.8 billion in the three-year period to the 2015/16 financial year. Government expects to finance the deficit through "a combination of drawdown on accumulated cash reserves and borrowing mainly from domestic sources".

Kuugongelwa-Amadhila is confident of the future of revenue growth, projecting an average increase of 7.3 percent annually to reach a N$45.6 billion revenue base by 2015/16. "Projected improvements in revenue is on account of initiatives to improve the tax administration regime, the introduction of alternative sources of revenue, recovery in the Southern African Customs Union (SACU) Common Revenue Pool and projected higher collections as the domestic economic recovery gathers steam," said the finance minister.

This year's budget is baptised - "Growing the economy, optimising development outcomes," which the minister says "reflects the people-centred and development oriented budget policy, which our government has consistently and persistently pursued over the years."

Budget allocations (2013/14 to 2015/16)

Education - N$35.2 billion

Health - N$15.4 billion

Defence and Safety and Security - N$27.3 billion

Transport - N$8.2 billion

Agriculture - N$7.1 billion

Housing and Sanitation - N$5.8 billion

Pensions - N$3.9 billion

Youth Development - N$1.9 billion

Environment and Tourism - N$1.8 billion

Rural Water Supply - N$1.1 billion

Highlights of Budget 2013/14

Total expenditure: N$47.6 billion (up 19%)

Operational expenditure: N$37.2 billion (up 19.8%)

Development budget: N$8.1 billion (up 21.3%)

Budget deficit: 6.4% of GDP (up from N$3 billion to N$7.4 billion.)

Total debt: N$32.4 billion (up from N$27.5 billion)

Non-mining tax: 33% (down from 34%)

Social grants: N$50 increase to N$600 per month

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