By Hilary Mare
FINANCE Minister Calle Schlettwein has moved to defend current Government fiscal stance by stating that the budget policy measures that we have adopted are necessitated by the exigencies of the situation that Namibia is facing as a small, open economy.
Reaffirming this stance and encouraging all stakeholders to re-adjust their budgets temporarily, the minister reiterated that these measures are indispensable to correcting current imbalances and restoring sustainability.
“All players, public and private are called upon to readjust to the new norm, which is temporary and define the adjustment phase. Fiscal and financial discipline are needed to ensure that we adhere to the adjusted budget lines, while implementing other complementary measures to optimise growth and development outcomes,” he said.
This follows the outcome of the Moody’s assessment which reaffirmed Namibia’s Sovereign Credit Rating at the investment grade notch of Baa3, which is the equivalent of a BBB- investment grade assigned by Fitch since 2005. Similarly, Moody’s has revised the ratings outlook from stable to negative, reflecting a number of prevalent risk factors which need to be managed prudently and mitigated in the short to the medium-term. Namibia’s relatively robust economic growth prospects, solid public debt levels relative to peers despite rapid rise in recent years and political stability and legislative framework, has proven conducive to reaching consensus on key macroeconomic policies and structural reforms.
Against the backdrop of the credit ratings assessments which have been echoed by the IMF in the 2016 Article IV Consultation, Government has already taken steps to address the identified weakness. “We were aware of these downside risks and hence consistently followed through on the fiscal consolidation stance to the economy I had introduced in the 2015/16 budget. What has been under-rated, was the severity of the cumulative effects of some of the domestic and externally-induced negative effects. In reaction to that, I have tabled the 2016/17 Mid-Year Budget Review alongside the Medium-Term Policy Statement which laid out the medium-term fiscal policy stance as well as the supportive policy interventions to mitigate the impact of an otherwise steeper consolidation path,” added the minister.
He added that domestically, Namibia is faced with the liquidity constraints to finance the elevated financing needs as a result of these shocks on public finance. As a result of these adverse developments, it was necessary and timely that Government responds to these shocks in a timely manner with appropriate magnitude. “These reforms are necessary and we must follow through with our pro-growth consolidation fiscal stance, without which our hard-won macroeconomic stability and fiscal sustainability will be eroded. We are optimistic that the current difficulties are manageable and that they are transitional. I thank the legislature, across all political parties represented in parliament, for the support in passing the 2016/17 Appropriation Amendment Bill which front-loaded the consolidation measures and narrowed the budget deficit for the stabilisation of public debt, with consequent beneficial effects on the external position,” he said.
Confidente. Lifting the Lid. Copyright © 2015