By Hilary Mare
FINANCE Minister Calle Schlettwein yesterday presented a N$62.54 billion budget for 2017/18 financial year aimed at stabilisation of growth in public debt, ensuring fiscal sustainability and, thus, safeguarding macroeconomic stability as objectives of the fiscal consolidation programme.
This proposed expenditure outlay is equivalent to 36.6 percent of GDP and an increase of 1.7 percent from the revised budget of N$61.50 billion for the previous year.
For the MTEF, total spending is projected to remain relatively flat, with indicative allocation for 2018/19 set at N$61.86 billion and N$62.72 billion for 2019/20.
In particular, the indicative ceiling for 2018/19 normalises to N$61.86 billion as once-off payments for services are completed.
The total non-interest expenditure for 2017/18 amounts to N$57.54 billion. This is projected to increase by about 2.2 percent annually to reach N$59.59 billion by 2019/20.
Statutory payments, which represent the Government obligations on debt servicing, are budgeted at N$5.0 billion in 2017/18 or some 8.9 percent of revenue, as against the statutory cap of 10 percent of revenue. Restraint on future debt growth and a reduction of debt commitments will contain debt servicing costs within the fiscal benchmark.
“The pace of the fiscal consolidation over the MTEF is a measure of our resolve to attain these objectives, safeguard macroeconomic stability and protect our sovereign credit investment grade. Its speed is determined by practical considerations of how fast we wish to achieve the consolidation objectives, ability and available liquidity to finance a larger budget deficit and the need to avoid large negative impact on growth and service delivery due to sudden expenditure correction. This budgetary framework is an opportunity for us to rebuild fiscal space, its composition reflects the twin objectives of anchoring the budget in a sustainable fiscal framework, while providing for fiscal policy support to socio-economic objectives,” said the Minister.
Additional allocation is made relative to the Mid-Year Review aggregate expenditure ceiling proposed for 2017/18 with a total of about N$1.8 billion budgeted to meet obligations for services rendered to Government and still outstanding from FY2016/17, about N$2.4 billion is allocated to various Offices/Ministries and Agencies to support continuous provision of basic services to the public as well as for productive investment in the economy.
“The public-sector wage bill, which now stands at 49 percent of total noninterest expenditure, has been a major driver for increased public expenditure. Effective measures are required to sustainably manage annual growth in the wage bill. This includes managing the growth of the public sector through natural attrition such that each Office, Ministry or Agency identifies non-critical positions which should not be filled once they fall vacant and that annual cost of living adjustments are capped at levels not more than annual inflation,” added the Minister.
Economic and Infrastructural Development
Economic and i n f ras t ructure sector is a primary domain for the public-sector investment programme and a means through which fiscal policy support to the economy is deployed. 15.8 percent of total non-interest expenditure or some N$9.09 billion is allocated to the economic and infrastructure development part of the budget. Over the MTEF, the allocation is approximately N$28.01 billion.
The allocation to the economic and infrastructure cluster is further supported by targeted allocations to public enterprises in the economic sectors for targeted infrastructure and development finance projects. The key projects are the rehabilitation of the national railway, the ongoing expansion of the Port of Walvis Bay, several national roads, water and storage infrastructure, the mass land servicing programme and increased funding to the public financial institutions for private sector support and SME development.
47.7 percent of total non-interest expenditure has been allocated to the social sectors to, among others, support programmes in education, health, poverty eradication and housing. The total budget to the social sectors is N$27.44 billion, or N$83.71 billion over the MTEF, and N$11.98 billion to the Ministry of Basic Education and Culture and N$36.17 billion over the MTEF. This is the highest budget allocation, in keeping with the historical priority accorded to education.
Ministry of Higher Education, Training and Innovation got N$3.07 billion, which amounts to a total of N$9.26 billion over the MTEF. Out of this allocation, a total of N$926.04 million is allocated to UNAM and N$533.58 to Namibia University of Science and Technology to support expanded access to tertiary education and vocational training.
The Ministry of Health and Social Services received the second highest allocation of N$6.51 billion and N$20.26 billion over the MTEF, N$3.28 billion is allocated to the Ministry of Poverty Eradication and Social Welfare for the provision of Social Safety Nets and other antipoverty intervention measures. Over the MTEF, this allocation amounts to about N$10.00 billion.
“In particular, Old Age Pension is increased by a further N$100.00 per month. This brings total annual monthly grant to N$1,200.00 per senior citizen, coverage for orphans and vulnerable children will be further expanded to include all the qualifying beneficiaries,” extended Schlettwein.
Public Safety and Order
The Public Safety Sector is allocated an amount of N$12.45 billion and N$38.02 billion over the MTEF, representing the continued investment in peace, public safety and rule of law. The Anti-Corruption Commission has received additional resources of N$5.0 million to fulfil its mandate, which should include the swift investigation and prosecution of suspect activities and involved persons. Equally, other institutions such as the Judiciary and Attorney General’s Office were allocated additional resource of N$85.0 million and N$40.0 million respectively to enable a seamless process, from reporting to verdict. The Ministry of Safety and Security was kept stable at N$5.02 billion. Defence expenditure reduced to N$5.68 billion, from N$5.95 billion in FY2016/17.
A total allocation of N$8.57 billion has been made to the public administration sector to support effective governance and efficient administration of the public sector. Over the MTEF, this allocation is N$24.99 billion. The Auditor General’s Office is availed additional funding equalling N$30 million. An amount of N$200 million is allocated to the contingency fund or some N$500 million over the MTEF to cater for unforeseen emergencies. For the 2016/17 financial year, a total of N$200 million was allocated to the Contingency Fund and N$164.05 million was spent.
”Regarding tax policy, I do not propose general tax rate increases or introduction of new taxes at this stage, save for the policy proposals announced during the Mid-Year Review. This is in consideration of the current economic conditions to encourage economic agents to produce and invest,” Schlettwein explained.
However, he proposed new tax policy and tax administration reforms as well as completion of some of the major on-going reforms with the objective of deepening and broadening the existing tax base, curbing tax base erosion, profit shifting and tax planning opportunities as well as improving overall efficiency in the tax administration function.
As an annual practice, and in line with targets set for the total tax burdens on respective excisable commodities increases were agreed under the SACU Agreement.
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