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Budget delay raises suspicions

Date

15 Mar 2019

Delays in tabling the 2019/20 national budget have raised suspicions amongst economists, who strongly suspect that the economy might be in turmoil than widely thought.

Executive Assistant to the Finance Minister, Esau Mbako, confirmed on Thursday that the tabling of the 2019/20 fiscal year budget has been postponed to the 27th of March, the second time in as many weeks.

The tabling of the budget was initially scheduled for the 13th of this month, but was postponed to Tuesday 19 March, which has now been cancelled.

Mbako told the Windhoek Observer upon enquiry that the budget had been delayed due to scheduling conflicts in the National Assembly. He said the Speaker of the National Assembly, Professor Peter Katjavivi, had asked them to move the date of the tabling of the much-anticipated budget to the 27th of March.

Finance Minister, Calle Schlettwein, told a local daily that the tabling of the 2019/20 national budget had been moved purely for logistical reasons.

“There is nothing sinister about it,” Schlettwein is quoted as having said.

The minister added that the 27th was the “final” date.

But an economist who spoke to the Windhoek Observer on condition of anonymity said the delay in tabling the 2019/20 Budget Appropriation Bill was suspicious, adding that it does not make sense.

“What could be more important that they need to debate in the National Assembly?” the economist queried.

He said while delays in tabling the national budget were nothing new, it was rather strange that the finance ministry had delayed the upcoming budget twice for almost a month.

“If there is a very important bill that Parliament is currently seized with then the postponement makes sense, but if not then the national budget should be a priority,” the economist said.

Research Associate at the Economic Association of Namibia, Klaus Schade, told the Windhoek Observer that the postponement suggests that tough choices have to be made and that balancing the different demands and interests remains challenging.

Schade said coming up with a budget during an election year will certainly make it more challenging to introduce necessary, but painful reforms.

“However, reforms are necessary to put the country on a stronger growth trajectory in the future and regain fiscal space,” he said.

Schade said the government might wish to increase some taxes, apart from the annual increase in excise duties, or introduce new taxes in order to reduce the budget deficit.

“However, tax proposals contained in last year’s budget statements have not yet been gazetted,” he said.

He added that tax relief for low income earners would increase their disposable income and consequently their spending power, but warned that any additional taxes in the current economic climate would, unless targeting specific rent seeking behaviour, not be supportive of stronger economic growth.

Schade said due to low economic growth and lower inflation, revenue is not expected to increase significantly although Namibia could benefit from some additional SACU transfers, since transfers to the BLNS (Botswana, Lesotho, Namibia and Swaziland) countries in the latest South African budget were increased by about N$4 billion compared to the estimate a year ago.

“On the expenditure side, we do not expect major shifts although the current fiscal situation requires a clear prioritisation of growth-supportive sectors including education and health, but also on infrastructure that have a high potential to improve the country’s competitiveness and hence attract private sector investment.

“The wage bill needs to be addressed in a systematic and structured way, but it will take time to reduce the wage bill significantly. Employment in and salary levels of Public Enterprises need to be reviewed and subsidies cut significantly,” Schade further said.

Namibia’s new fiscal year starts on 1 April.

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