By Hilary Mare
THE Minister of Finance Calle Schlettwein this week told Parliament that the severity of the economic slowdown was understated and therefore growth for this year is expected to be considerably lower than the 4.3 percent earlier forecasted.
Delivering a ministerial statement on the state of the economy, sovereign credit rating outcome by Fitch and the potential impact of BREXIT on the Namibian economy in the House of Assembly, the minister added that with regard to fiscal operations, Namibia has to contend with considerably lower than anticipated revenue outturn, due to weaker economic output.
“As a small open economy and fragile in terms of the environmental impact, the effects of the slowdown in our major trading partners and global commodity prices are being felt in the domestic economy through a considerable slowdown in revenue and activity in some sectors of the economy. For this reason, growth for this year is expected to be considerably lower than the 4.3 percent projected in 2016. The severity of the economic slowdown was understated. Even at the global level, IMF had to respectively revise downward the global economic outlook in January, April and July this year.
“As a result of shortfalls in GDP and revenue during the FY2015/16, the fiscal indicators have changed; with the budget deficit for that year now estimated at about 8.3 percent, up from the 5.3 percent deficit that was budgeted for, while the public debt ratio has also risen to about 40 percent of GDP. This outturn has carried over to the current fiscal year and needs to be contained. Concerted policy response package will have to be rolled out, starting with the Mid- Year Budget Review this year and extended to the rest of the MTEF in a manner that balances between ensuring growth and social development, while placing public finances on a sustainable path,” stated the Minister.
In view of that, the minister assured that the Government is acting timeously to address the challenges and vulnerabilities that have been building up. The outlook has significantly changed relative to the baseline assumptions made at the time of the budget last year.
“We are now working on a comprehensive set of measures to shore up the resilience of our economy and we are frontloading measures to place public finances on a firmer sustainable path through a fiscal adjustment framework and its corresponding policy packages. I am due to announce, and start implementing these measures during the Mid-Year Budget Review which I will table in the last week of October this year,” added Schlettwein.
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