Government pumps N$2.5 billion into economy

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WINDHOEK, 08 December 2016 - Minister of Finance, Calle Schlettwein. (Photo by: Anna Salkeus) NAMPA

Desie Heita

Windhoek-Treasury yesterday revealed plans to release more than N$2,5 billion into the Namibian economy in the coming months, through payment of outstanding invoices, in hope of easing the financial squeeze being experienced in the country.

By announcing this, government also reaffirms finance minister Calle Schlettwein’s recent announcement in parliament that the country’s finances remain in the doldrums, hence failure to honour all debt with suppliers of services to government.

The money to settle the invoices would come from the N$3 billion loan secured through the African Development Bank (AfDB). The money is already in the government’s bank accounts, Schlettwein told journalists yesterday.

A team has been gathered at the finance ministry, with people pooled from other ministries, to pay attention to the outstanding invoices that they are paid in the next coming weeks.

Schlettwein acknowledged that the reason the consumption spending in the country took a knock is because of a drastic slow down in public spending, which account for 60 percent of the economy. “The budget cuts are for sure the main reason,” he said although he also blamed the private sector for adopting a wait and see attitude, withholding investments and spending to see what comes out of the turn.

He was however confident that the new release of money into the economy – through the payment of invoices – would “see some sign of [consumption] growth returning to the economy.”

The N$2,5 billion spending would be on outstanding invoices that various ministries have not paid to suppliers, in addition to the N$1,7 billion that government has budgeted to settle outstanding invoices. The N$1,7 billion payments include N$715 million paid to the public servants medical aid, the Public Service Employees Medical Aid Scheme (PSEMAS), and other payments to construction contractors that government has already settled.

“Unfortunately for us [we] unearthed another group of unpaid invoices [worth] between N$2 billion and N$2,5 billion,” said Schlettwein, who did not mince his words on the ministries undermining budget planning and their lack of financial discipline.

The N$2,5 billion invoices are for road contractors, utility bills for various town councils, some for medical services providers and other services rendered to the ministries.

“I have noted with serious concern that some [government institutions] have incurred expenditure outside budgetary provisions and have been accumulating unpaid invoices without budgeting for such liabilities. This practice undermines the budget and demonstrates a complete lack of financial discipline,” he said. As a result all outstanding invoices would be scrutinised to see if the payments are really for service rendered.

He was also emphatic that the pains being experienced in the economy were a result of the financial consolidation, which was not supposed to be without pain. “What we are seeing are pains [from that exercise] putting pressure on consumption. But the pain would have been much worse if we haven’t done what we have done. It could have been fatal if we had not reacted,” he said.

The outstanding invoices for PSEMAS are now at 50 days, with N$715,6 million paid since April this year, and Schlettwein saying would be brought to 30-days in the coming month or so. In the meantime, new contracts with medical professional willing to partner with the public servants’ medical aid scheme are being iron out, and are expected to come into force on 01 September 2017.

There is currently a review of existing contract, and the time to September would gives the healthcare providers ample time to scrutinize the terms and conditions and apply to be contracted-in with the Public Service Employees Medical Aid Scheme (PSEMAS).

“I wish to emphasize that PSEMAS contracts are not being terminated as portrayed in recent media reports. Reviews are being done to strengthen certain contractual provisions,” he said.

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