AS dust settles on the budget, one inescapable thought is Finance Minister, Calle Schlettwein’s prudent steps towards curbing corruption and bloated public expenditure.
Rightfully so, the narrative of this year is one in which ‘cuts’ will become the mainstay of political rhetoric and at the same time, the catalyst for escaping a recession and dodging a potential credit ratings downgrade at the hands of Fitch and Moody’s.
Essentially, Schlettwein should be applauded for progressing towards strengthening macro-fiscal frameworks and rebuilding the fiscal space as Namibia’s prime leeway to enhance national investment credit ratings strength, creditworthiness and national competitiveness as an attractive destination for investment.
The Minister’s astute introduction of a new culture of financial prudence in the public sector provides a glimmer of hope to a perilous situation that confronted the public purse not so many months ago and suggests a restoration of economic confidence.
The reason why these cuts are mounting up is not hard to state; as the economy has failed to pick up, so tax revenues have continued to undershoot and the public debt pile has only grown. This also exacerbated by how the Chinese have siphoned Government coffers milking billions of dollars from State contracts, a situation that Schlettwein has again vowed to address through a new procurement regime.
It is imperative to note further that the expected outcome is that the budget deficit as a percentage of GDP will fall from the current 6.3 percent to 3.6 percent by the end of the fiscal year. This is ambitious but not impossible. If revenue loopholes are plugged and wasteful spending and mismanagement are suppressed the deficit can be contained and the debt-to-GDP ratio will be within closer reach by 2020. This is why the Minister has vowed to further cut on subsistence and travel allowances and apply ideologies that prime efficient use of working hours to achieve saving spanning up to N$4 billion.
Pro-growth suggests realigning public expenditure with development goals, while fiscal consolidation translates into improved quality of spending and resource allocation prioritisation.
Notably and from self-realisation, Government has already pledged that the culture of doing more with less, affordability and stringent prioritisation is expected to be the norm than an exception during the next MTEF. This is also done with the knowledge that reigning in expenditure has reached its optimal level and any further spending cuts would pose a significant risk on effective public service delivery.
We believe that the consolidation framework has the objective of placing national public finances on a sound, prudent and sustainable path. It is a balanced consolidation adjustment, with a supportive policy package to enhance efficiencies and quality of spending and cushion the adverse impact of expenditure cuts on growth and service delivery.
Therefore Government is right in moving away funds from non-core budget sub-divisions to the productive undertakings so that real, long-term benefits are realised in the economy over the long term and this must be upheld if growth and prosperity is to be realised.
Conclusively, achieving shared goals and fiscal sustainability is a collective responsibility and retaining fiscal sovereignty is not a matter of choice. The Minister of Finance stuck to the MTEF winning formula that seemed to keep the sub-investment grade rating at bay, it has been sufficient until now. With political will and a change of bureaucratic culture, Schlettwein’s critics and pessimists on trimming the budget deficit will not prevail
Confidente. Lifting the Lid. Copyright © 2015