Budget Draws Mixed Reaction

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By Frederick Philander WINDHOEK Various stakeholders from the economic and political spectrum have reacted with mixed feelings to the national budget of N$15,3 billion that was tabled on Thursday in the National Assembly by the minister of Finance. Old Mutual Namibia sees the budget as relatively balanced, the Namibia Economic Policy Research Unit agreed that it is a pro-poor national budget, whereas SWANU considers it an insensitive national budget. “It is a relatively balanced budget with an expansionary bias, which has surprised on the upside. The positive in the budget is the expected increase in the expenditure of 18 percent, which provides an increase of 23 percent in old age grants to N$370 per month and additional spending,” said the CEO of Old Mutual Namibia, Johannes Gawaxab. According to him, the budget also provides for the development of the Kudu gas field and relaxation of foreign exchange controls to allow institutional investors to invest up to 20 percent of total assets offshore. “The government’s equity participation with NamPower is a welcome development in the light of a possible shortfall in the supply of electricity. It shows government’s commitment to addressing the looming energy problems. The negatives in the budget are no tax relief for individuals and an increase in debt as a percentage of Gross Domestic Product (GDP),” he said. Gawaxab also expressed disappointment with the lack of clarity on domestic asset requirements relating to whether a prescribed minimum investment of 5 percent in unlisted shares and reducing the investment in dual listed shares to 10 percent over a five-year period would be implemented. “However, the unaltered tax free status of unit trust investments should continue to have a positive effect on the competitiveness of the local industry as opposed to its South African counterpart. Whilst fiscal discipline displayed thus far can be commended, the wisdom of running a budget surplus for a developing country such as Namibia can be questioned,” Gawaxab said. Swanu, the country’s oldest political party, applauded the Minister of Finance’s efforts in preparing and presenting the budget. “Because of its socialist policy as underpinned by equity and justice, Swanu has four main observations regarding the tabled budget,” says the party’s finance secretary Karupumbura Veii, in a press release. The allocation to rural development programmes should have been made clearer to be more convincing that the budget was pro-poor, more specifically in the context of the National Poverty Reduction Programme. “Sorry Minister, try again because poverty is not theory, but reality,” he observed. According to him, in a country that has the widest gap between the rich and the poor, budget allocation must be biased in favour of regional and productive development programmes. “The N$750 million for Kudu gas over the next three years is fine. Nonetheless it will not help much with the closing of the gap. After all, had NamPower had the foresight some years ago, other sources would have been explored for this purpose,” said Veii, who also warned that as long as the country’s land question is not addressed in earnest, socio-economic disparity and under development will remain. “Swanu would have liked to see specific deliberate well-thought agrarian reform programmes and projects with clear linkages to resettlement schemes with sufficient funding indicated in the budget. Mind you, the minister is responsible for general economic development and not just to see to it that Air Namibia receives N$151 million. The minister is exhorted to address the land question,” he asserted. He also charged that the education sector is urgently begging for more funding and that the government is considering outside borrowing. “State health infrastructure and facilities leave a lot to be desired, not to mention the state of agriculture and unemployment. Yet, the minister is boasting of a once-off budget surplus, which surplus could have been used to meet these urgent needs. She has confirmed that the consequent years will not see a surplus but deficits. What then is this surplus for?” he questioned. Veii in conclusion congratulated the minister of Finance for increasing the old age pensions, and allocating more funding to the Ministry of Gender Equality and Child Welfare. NEPRU welcomed the additional funding earmarked to overhaul the country’s education sector. “After years of unsatisfactory performance of this sector, this is a necessary task and will hopefully increase the returns of investment in education,” a statement from the economic watchdog of the country said. “The minister announced several additional taxes she plans to implement during the year ahead. Income from these new tax sources is apparently not yet reflected in the revenue forecast. The introduction of these new taxes would support the theme of a pro-poor budget if they do not affect the poor,” it said. The statement indicated that the civil service needs to be right sized. “Personnel expenditure continues to absorb the major share of the budget, leaving fewer funds for capital investments. It is necessary to design a comprehensive strategy for the public sector focusing on its core functions, but balance it with social responsibilities,” proposed NEPRU, also suggesting that products manufactured in Namibia should not be targeted for envisaged luxury VAT rates. NEPRU also welcomed the expected increase of benefits to Namibia from the SACU Common Revenue Pool, up to 65 percent in the current year. “The tax audits that have started in the north of the country and that have contributed significantly higher revenue from VAT will be extended to other parts of the country,” NEPRU said.