Will Budget Mitigate Between Rich and Poor?

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By Frederick Philander WINDHOEK “To defeat poverty and corruption in Namibia requires involvement in decision-making, planning and development at various levels because poverty and prosperity can never be partners in the same kraal of peaceful co-existence.” The Speaker of the National Assembly, Theo-Ben Gurirab, made these remarks when he officially opened a Budget Analysis workshop for parliamentarians and economic experts. The Parliamentary Standing Committee on Economics, Natural Resources and Public Administration presented the workshop in collaboration with the Namibia Democratic Support Centre (NDSC). “A budget can put an end to poverty and backwardness and place resources within the peoples’ reach for self-development, but it can also be discriminatory in favour of the haves, including CEO’s of the SOE’s and doubtful projects beyond the reach of the unlucky masses. There is often a difference between political choices that leaders make and the essential needs of the larger society,” Gurirab said at the workshop that drew about 100 participants. The Speaker strongly urged that in pursuing transparent business principles, the country should be able to achieve the ideals of compassion and fairness. “It is not an easy task mitigating the divide between poverty and prosperity. Budgeting is expected to find the solution. Experts can analyse the details of the budget, but the choices on how to dispense lie somewhere else,” Gurirab said. The chairman of the standing committee, Hage Geingob, reminded those present that a budget shows for a given year the planned expenditure and expected receipts that government spending and tax programmes would yield. “This particular budget contains specific programmes such as education, defence, welfare, tax resources, etc. we would like to interrogate. In this year’s budget we have a happy surplus coincidence for which I congratulate the Minister of Finance and her staff. We are equally impressed by the fact that the budget deficit will be lower than the normally required level 3 per cent. That feat is also praiseworthy,” chairman Geingob said. However, to him it is worrisome that the budget deficit for 2003/2004 was 7 percent. “At the same time, government debt is still at 35% of the GDP instead of the proposed 25 per cent. Since the government debt is simply related to the government deficit, it would be helpful if officials from the Ministry of Finance shed more light on the issue,” Geingob suggested. The Permanent Secretary of the Ministry of Finance, Calle Schlettwein, presented a speed-point overview of the national budget in which he engulfed his ministry in self-praise. He proudly credited his ministry’s ability for tabling a pro-poor and growth budget in the National Assembly, with its sound approach to fiscal policy and its improved domestic tax collection system. According to Schlettwein, the country’s debt stock increased following high deficit exchange rates in 2003/04, but he intimated that the debt stock is set to stabilize around 33% in the current MTEF. Economist Robin Sherbourne also made interpretive inputs into the budget analysis, praising and criticising it. “The Minister of Finance has with this budget raised government spending to 5% whereas two years ago, the hatches were battered down to control the deficit and we were moving away from our target of 13%. The country is now going back to its old high spending,” Sherbourne charged. In his view, the government did well by increasing the old age pension, which looks acceptable on the surface. “However, the old age pension didn’t keep track and pace with the inflation rate. In fact, pensioners grew poorer since 1990, they don’t get what they deserve because pensions are connected to some sort of economic index,” the seasoned economist said. Sherbourne also didn’t mince his words regarding the imbalances of the allocation to the Intelligence Service, the protection of VIP’s, the army, the Northern Railway Line and the building of the new State House. “It beats me how an allocation of N$109 million could be allocated for the protection of VIP’s, an amount that represents almost half of the budget allocated to the Namibian Police Force to combat crime. In addition, the Northern Railway Line could have been a political attraction, but definitely not an economic one. What are we going to transport on the railway line to recoup the investment?” Sherbourne wanted to know. Sherbourne also expressed confidence in the future economic development of the country if the government can resolve parastatal burdens such as Air Namibia and Namibia Wildlife Resorts. “With such financial burdens the country is pursuing an expensive policy with little commercial return as far as the land issue, a bloated civil service and others are concerned. We must move out of these phases to develop a long-term fiscal policy. It is imperative that these issues be resolved to help create new business ventures to help counter poverty,” he said.