Budget Responses Confusing the Public – Tweya

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By Petronella Sibeene WINDHOEK As the adage goes that education enlightens the mind to improve man’s usefulness, the education and acute skills shortages in the country have largely constrained economic growth in Namibia. The Deputy Minister of Finance Tjekero Tweya expressed this view in light of some criticism that the recently tabled budget has received. In an interview with New Era, Tweya indicated that the national budget for 2006/7 initially received positive remarks from independent analysts but after thorough assessment it brought about negative criticism. He said low education inevitably leads to poor productivity of labour and one way of improving the Namibian economy is through education. Governor of the Bank of Namibia Tom Alweendo recently expressed similar sentiments when he launched the Quarterly Bulletin and the Bank’s 2005 Annual Report. Alweendo indicated that although the focus now is on the improvement of education, there is a great need for the private sector to similarly improve its technical and managerial skills for the economy to grow. In realisation of this, the Namibian Government has set aside N$1.3 billion over the Medium Term Expenditure Framework (MTEF) period to improve the quality of education through programmes under the Education Training Sector Improvement Programme (ETSIP). Apart from that, Tweya says there seems to be a lack of understanding by some members of society as to what it means when the budget is said to be pro-poor and pro-growth. “The mixed responses (to the 2006/7 budget) confused the public as to whether the budget is actually satisfactory or not,” said the deputy minister. Considering that growth-enhancing measures alone might not necessarily be enough or sufficient as the economic growth might not trickle down and benefit the poor given the income inequalities, a pro-poor, pro growth budget is vital. Clarifying what is meant by a pro-poor budget in the Namibian context, Tweya said that would mean a fiscal policy tool aimed at targeting the poorest population of society by allocating resources towards economic activities that would liberate the poor from the poverty trap. One of these economic activities includes education and skills training. Further, the amount allocated towards programmes such as social grants, expansion of safety nets, improvement of education and health services as well as rural infrastructure all bear testimony to what it means when the budget is acclaimed pro-poor. Meanwhile, preliminary results of the Household Income and Expenditure Survey 2003/4 as released by the National Planning Commission reveal that the Namibian Government’s economic policy including the budget has been pro-poor. This is evident in the decreasing number of households living in poverty from 37.8 per cent in 1993/4 to 27.9 per cent in 2003/4. Pro-growth, according to Tweya, refers to policies aimed at stimulating the productive capacity of the economy through investment in physical infrastructure to unlock the economic potential of the country. In the Namibian case, the economy has endured a slow subdued growth since independence. The cause to the slow economic growth has been identified as low investment relative to domestic savings, skills gaps and lack of entrepreneurial talent among the youth. In response to these shortcomings, “the Government has reviewed the Domestic Asset Requirement, a policy intervention meant at ensuring that local savings are retained and translated into domestic productive investment,” stated Tweya. The Deputy Minister indicated that the other government policy that has been grossly misunderstood is the surplus policy. He said the Government is not preoccupied with a surplus just for the sake of it. “On the contrary, fiscal consolidation is a necessary condition for growth,” he said, adding that a reduction in total public debt is necessary because debt has started to crowd out productive expenditure due to the high cost of borrowing and ultimately constrained economic growth. “Fiscal consolidation is a first step in a pro-poor pro-growth budget. Quite interestingly, the much criticised fiscal consolidation … has landed Namibia the sovereign credit rating of an investment grade,” he concluded.