February 28, 2012

Budget aimed at more jobs, economic recovery

The Ministry of Education has received a lion share of the national budget, namely N$9.4 billion. "It is important to invest in the educational sector because without a properly educated population, Namibia will not make any significant strides towards achieving Vision 2030 and reach a higher standard of living," said independent economist, Klaus Schade. He added that when the government builds new schools, hostels, teacher accommodation, the facilities must be maintained.

The Ministry of Health and Social Services is set to receive N$3,975 billion, the Ministry of Defence N$3,414 billion, the Ministry of Works and Transport N$3,084 billion, and the Namibian Police N$2,362 billion.

However, finance minister Saara Kuugongelwa-Amadhila plans to start gradually reining in Government spending again after a succession of years in which public spending was boosted in an effort to stimulate Namibia’s economy and encourage job creation. The Finance Minister tabled a national budget setting out estimated Government spending of N$40,156 billion for the financial year from April 1 2012 to March 31 2013 in the National Assembly. The spending would represent an increase of 8 per cent on total spending of N$37,165 billion in the national budget for the 2011-12 financial year, in which Government expenditure was boosted by an unprecedented 35 per cent compared to the previous year’s spending of N$27,5 billion. With Government’s income during the 2012-13 financial year projected at N$35,4 billion, a budget deficit of N$4,736 billion – or 4,4 per cent of the country’s Gross Domestic Product – is on the cards. “This is a cautious, but targeted budget,” Kuugongelwa-Amadhila said.

The caution would be felt by the country’s old-age pensioners. The Finance Minister announced that they would receive an increase of N$50 on their monthly State pension, bringing it to N$550 a month. With the 2012-13 budget, Government aims to maintain the increased spending envisaged in its Medium Term Expenditure Framework (MTEF) in the period from 2011-12 to 2013-14, “amidst an extraordinary challenging global economic environment”, said. “The budget summons our collective responsibility to eliminate waste, to be targeted and timely with programme implementation and to do more with less,” she told the National Assembly. “This budget proposes policy actions aimed at accelerating inclusive economic growth, job creation and efficient service delivery,” she said. Government’s increased expenditure since 2008 had worked well and had had a positive impact on growth and poverty reduction, Kuugongelwa-Amadhila added. “However, one thing is clear. Government is determined not to replicate the debt crisis that emerged in other parts of the world, where excessive and unaffordable debt has brought recession and worsened unemployment. Instead, we will rein in significant expenditure expansion, stabilise growth in public debt and strive for public spending that will support high economic growth and increased employment, while maintaining macroeconomic stability.” Given the uncertainties in the global economy the focus of Government’s fiscal policy would be on the maintenance of long-term macroeconomic stability, she said. As a result, no substantial budget expansion would be accommodated beyond what is provided for in the current MTEF, she continued.

Namibia’s economy is estimated to have grown by 4,4 per cent during 2011 – down from a growth rate of 6,6 per cent achieved in 2010 – and this low pace of growth is expected to continue this year, Kuugongelwa-Amadhila said. It is a matter of great concern to Government, though, that the economic growth experienced to date has not translated into significant job creation, she said. As a result of the last years’ major increases in Government spending, with much of this aimed at job creation through the Targeted Intervention Programme for Employment and Economic Growth, the national budget has been in a deficit since 2009-10, she said. The deficit for 2011-12 is now estimated at 11,2 per cent of GDP, she added. According to the main budget document the deficit during 2011-12 amounted to N$10,3 billion. The deficit is projected to increase to N$5,7 billion during the 2013-14 financial year, before falling to N$467 million in 2014-15. Total Government spending is projected to increase by only two percent between 2012-13 and 2013-14, to N$40,958 billion, and to then decrease by two per cent to N$40,139 billion in 2014-15. Namibia’s public debt reached the N$24,9 billion level in 2011-12, and is projected to increase to N$28,3 billion (27,7 per cent of GDP) in 2012-13, N$34,5 billion (30,3 per cent of GDP) in 2013-14, and N$35,5 billion (27,9 per cent of GDP) in 2014-15, Kuugongelwa-Amadhila said. (The Namibian)

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