Windhoek-Revenue generation, funding of capital projects and cost cuts are likely to inform the country’s 2018/2019 national budget, due to be delivered this afternoon by Finance Minister Calle Schlettwein, analysts predicted.
Mally Likukela, managing director of Twilight Capital Consulting, said three things are definite, namely announcements on which capital projects are going to be frozen due to funds shortages, amplification of cost-cutting measures to curb resource wastage (which will include measures to also manage the high civil servant wage bill), and the establishment of the Namibia Revenue Agency.
“Other means to increase tax base such as pre-assumptive tax will be mentioned as well, plus the usual increase in sin-tax. There will be some modifications in approaches towards funding social services such as health, education, the food bank [and so forth],” he told New Era yesterday.
“This will see a clear departure from the initial implementation program as per the Harambee blueprint on poverty eradication and wealth creation as well as NDP5.”
Economic analysts also expect the national budget to focus on themes of pro-growth, fiscal consolidation, economic stabilisation and a return to growth. These themes have been suggested as government grapples with slow economic growth of two percent or less and as it scrambles to reduce the national debt down to 35 percent from over 40 percent.
Another economist, Klaus Schade, expects a continuation of fiscal consolidation since not all fiscal targets, like budget deficit and public debt, have not been met.
“Revenue could even come in lower than expected because of the lower-than-anticipated economic growth last year that will have a negative impact on profits and hence on corporate taxes as well as on VAT,” he forecasted.
“SACU transfers might also be lower this year than previously expected because of subdued growth in South Africa as well as the stronger rand/ Namibian dollar,” said Schade.
He added that government will continue to prioritise expenditure on social safety nets, education and health – and if savings elsewhere allow, will increase capital expenditure, in particular for infrastructure projects.
“There is a need to clearly prioritise expenditure within ministries, for example allocation to textbooks, stationery, school-feeding programme or medication. Government could consider a comprehensive review of public sector employment in order to address the high wage bill. This will only bear fruit in the medium to long-term, but not in the short-term,” Schade added.
“Government’s stronger stance regarding public enterprises should result in a reduction in bailouts and an improvement in service delivery. Except for the usual increases in excise duties on alcohol and tobacco, tax rates are expected to remain unchanged,” Schade concluded.