Windhoek-Finance Minister Calle Schlettwein yesterday remain steadfast in his conviction that the country is not broke and said in no way has government lost the ability to honour its financial obligations. At his first media briefing for the year, Schlettwein emphasised that the payment of salaries is still government’s top priority.
“[Being] broke is when your total assets, including cash, are less than your debt. We are far from that. What happened [in the past months to date] is we had liquidity problem,” said the minister, adding that the liquidity problem has since been solved through the recent special bond auction that raised N$3,6 billion.
Further he said all government’ outstanding financial commitments that were behind had been paid with government paying N$10 billion in the last two months of 2016.
Government’s all other financial obligations are now back within the 30-day period.
He also said there is no truth in reports that several parastatals are not able to make salary payments because of finance ministry’ systems malfunctioning. “There was no system malfunctioning at the ministry which prevented the remuneration payment for any government ministry, offices or agency. I thus urge offices, ministries and agencies to diligently set out their Treasury Authorisation Warrants and timeously submit their requests to the ministry in accordance with the established procedures,” Schlettwein advised.
Schlettwein noted that during December 2016 alone government was able to execute a total of N$5.6 billion expenditure, which was about 21 percent higher than the previous month.
This, he said, was part of government’s expressed commitment to honour its contractual obligations. “We have increasingly honoured some of the outstanding obligations which are duly budgeted for in the current revised budget,” said Schlettwein.
“As you are aware, the total expenditure for the current financial year was revised downward by N$4.5 billion to N$61.49 billion as a measure to align the budget to the revised economic and revenue outlook…Since November 2016, following the Mid-Year Budget Review, the government deliberately increased payments to suppliers, contractors and other service providers. To put this into perspectives, the TAW approved for November and December 2016, amounted to N$8.2 billion, whilst the actual payments made by the Government totaled N$10.1 billion,” Schlettwein stated.
He continued that significant shocks to the regional and domestic economy, and their consequent effect on public revenue, necessitated the timely implementation and targeted fiscal consolidation to align expenditure to the revised economic and revenue outlook to maintain sustainability. Due to these measures government has managed to reduce the budget deficit from what would be 9.1 percent to 6.3 percent in the current year. The Mid-Year Review target to further reduce the budget deficit to close to 3 percent in the next financial year can be seen as a measure to stabilise and eventually reduce growth in public debt.
“Although our debt levels have increased and we put measures in place to bring it down to 35 percent of Gross Domestic Product (GDP), it is noteworthy to emphasise that relative to some other economies in the region, for instance South Africa, its indebtedness is estimated at 51.4 percent to GDP for 2016, and Angola around 72 percent to GDP,” Schlettwein noted.
“Another misrepresentation, which has been served to the public, is in regard to alleged “plundering” of Government Institutions Pension Fund (GIPF) money as bailout for government. “GIPF responded to this misleading characterisation last year. But suffice to say, government, as the guarantor of GIPF, has overseen the growth of GIPF assets over the years to become one of the well-managed pension funds on the African continent. With assets valued at about N$90 billion, GIPF is a key market player and participates in various investment opportunities, including the Government bond programme,” he stated.
Schlettwein explained that like any other sovereign nation, one way the governments use to raise money is through the special auctions, provided that the required amount could not be raised through the normal auctions. This method was used by Namibia during this financial year, where the invitation was extended to all market participants and an amount of N$3.6 billion was raised through the special auction.
“I thus wish to assure the public and the service providers to government that the current budget implementation is on course. The preparation for the 2017/18 budget is also on course and I intend to table the budget not later than the second week of March 2017. I have also laid out the priorities and fiscal policy stance for the next Medium Term Expenditure Framework (MTEF) during the Mid-Year Budget Review. We shall follow through with the stated policy direction, emphasising fiscal consolidation and without losing focus on growth dimension as well as poverty reduction efforts,” Schlettwein concluded.