New Era (Windhoek)

21 February 2014

Namibia: Hats Off to Another Prudent Budget

editorial

THIS year's national budget may be big in numbers compared to the previous budget, but as with a growing household, so goes the growth of the needs of the household and the expenses to maintain such needs.

What does come out clearly in the Treasury's tone though is the fiscal consolidation element, almost frugality, within the talks to "strengthen public finance management". The Treasury clearly wants to see returns for its money, and has realised that sometimes making money available and dishing out hard cash through tax breaks, social grant increases and other incentives to the public, are not sufficient to reach the sustainability goals. Hence the new fiscal policies that reek of parsimonious elements. Saara Kuugongelwa-Amadhila, the Minister of Finance came out strongly and clearly against wastage unnecessarily - bureaucratic systems that, instead of helping, defeat the purpose of an expansionary budget.

For instance, the Treasury realised that increasing social grants alone has not ensured that all of the elderly and vulnerable children in the country receive these grants.

In the long run, the increases in social grants help very few instead of caring for the majority of the elderly, orphans and vulnerable children that need them most. Hence, in this budget money is made available to widen accessibility to social grants.

"We will continue to strengthen public finance management, improve the quality of expenditure and strive to achieve value for money," was one of the minister's statements when she tabled the budget in Parliament this week.

Indeed, sectors such as education cannot continue to receive huge chunks of money with no tangible results. It is time to make sure that spending on education delivers the desired results.

The new approach is welcomed and eyes are now on how it would be implemented. As the minister said the fourth priority of the budget is to curb waste and bureaucracy, which is costing the government and hampering the initiative of those who wish to contribute to economic growth and job creation. Hence, state-owned enterprises (SOEs) are being discouraged from their usual habit of extending the begging bowls to the Treasury for bailouts and thus ballooning public debt levels.

SOEs are encouraged to borrow money from the market using their balance sheets, albeit with arms-length assistance of government guarantees. SOEs "with strong balance sheet will continue to be encouraged to raise capital in the market through commitment of sovereign guarantees." Further, the budget emphasises that the diversified funding sources would be harnessed to mitigate the impact on public debt.

The other component of the budget is the re-aligned approach to the management of the country's funds accompanied by new and strengthened fiscal policies, all which are hoped will entice an increased participation of the private sector in the creation of jobs and economic growth.

"Increased support for the private sector and industrialisation through expanded access to development finance and targeted incentives [shall be added]," the minister said. The finalisation of the public private partnership framework would be finalised this year.

The total expenditure outlay of N$60.28 billion reflects a 29.1 percent increase in operational expenditure that now stands at N$48 billion. Part of the increase is to pay civil servants their salary increases agreed with trade unions in the previous years and to make salary adjustments according to the new job evaluation and re-grading, which civil servants have patiently awaited for the past years. The development budget increased 17.6 percent to N$9.58 billion.

Education received the largest chunk, N$13.1 billion, nearly 30 percent of the entire budget for this financial year alone, and N$42.10 billion for the three-year financial period ending 2016/17.

The money is to "fund the development and upgrading of education facilities, provision of teacher accommodation, [procure] learning materials, recruit qualified teachers, and support institutions of higher learning including vocational training, as well as providing financial assistance to students."

Health received N$6.01 billion for this year and N$18.9 billion for the next three years "to address the development and upgrading of health facilities across the country, acquire health equipment and supplies as well as recruit and train medical personnel."

The projected revenues for the financial year are N$52.47 billion, and averages at N$59.08 billion during the three-year rolling budget until the 2016/17 financial year.

Yet even though the custom receipts from the Southern African Customs Union (SACU) are estimated to inject N$18.12 billion, the minister still repeated the risks of relying on SACU for revenue, given the ongoing reform of the formula to share the money among SACU member states.

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