Schlettwein says budget cuts were inevitable

By Elvis Muraranganda

Schlettwein says budget cuts were inevitable

Windhoek – Finance Minister Calle Schlettwein says although it is comprehensive, recently proposed expenditure cuts are necessary from the standpoint of financial sustainability.

Schlettwein said this in response to questions from members of parliament during the debate on the Appropriation Amendment Bill and the 2017/18- 2019/20 Medium Term Budget Review.

He stressed that government had considered the potential impact that such expenditure cuts and realignments would have on growth. “Hence, the emphasis on spending cuts with least impact on growth and accelerating implementation of structural reforms to support growth and mitigate the growth-reducing impacts of fiscal adjustment,” Schlettwein noted.



“In some instances we have to find better and alternative means of conducting our operations, while doing more with less,” he said, adding that while the direction of the downward adjustments have been foreseen and considered, the magnitude of the shocks is substantially higher.

According to him, government will maintain close coordination between fiscal and monetary policy during the adjustment period.

The country will also be catalysing opportunities for greater private sector participation in the economy.
On the possible unintended consequences of envisaged changes to domestic asset requirements, he said Namibia is a net exporter of capital, yet there is a substantial investment gap locally.

The minister explained that much of the growth projects and investment in key sectors, such as mining, are financed from abroad, while the country’s own capital flows out.

On the issue of the alignment of the budget to key development priorities he agreed that the budget should increasingly be attuned to the policy priorities, as articulated in the development plans and frameworks.

“Going forward, as the green shoots sprout and fiscal space emerges, such resources should be utilised to scale up allocations to the key growth and social development priorities.”

It was also his view that the factors impacting on the implementation rate are largely attributable to, among others, administrative and technical capacity challenges on project preparation and the approval process, the tender award process and the duration of feasibility studies.

He also laid out Namibia’s plan to curb illicit financial outflows in the context of the findings of the report by former South African president Thabo Mbeki.

In that report, Mbeki, as head of a high-level panel on illicit financial flows from Africa, stressed that Africa suffers as a result of large volumes of capital leaving the continent illicitly through multi-national corporations and corruption.
Earlier this year, President Hage Geingob also joined the fray in the war on illicit financial outflows by calling on African leaders to close the taps of corruption and to stop the siphoning of billions, if not trillions of much-needed dollars out of the continent.

During the debate on the Mid-term Budget Review, in response to a question from RDP’s Mike Kavekotora, Schlettwein said, as a resource-based economy with large multinational operators, it will be necessary to upgrade tax assessments and auditing skills.

“We have segmented taxpayers in various categories in order to better manage and administer the provision of taxpayer services to the specific categories of taxpayers,” Schlettwein explained.

“As such, large taxpayers resort under the Large Taxpayers Office with the associated skills needed to provide services and conduct appropriate assessments at that level.”

The finance minister said Namibia has also taken up membership of a global network of information-sharing and capacity development, aimed at deterring illicit financial outflows and revenue base erosion: “Within this framework, our Large Taxpayers Office is receiving technical assistance from Finland and further audit capacity development is being provided through cooperation with the European Union.”

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