Friday, 6 April 2018 the Institute for Public Policy Research IPPR and Cirrus Capital presented their report on the 2018-2019 National budget with Minister of Finance Calle Schlettwein a special guest at the event. The event was hosted at Lemon Tree Restaurant in Eros and involved a presentation by Co-Founder Rowland Brown and fellow economist Mr Cheryl Emvula, with the Minister responding to their commentary.
Mr Emvula began the presentation by outlining the current economic climate and backdrop of the budget, and subsequently reporting on the projected sources of revenue as outlined in the budget. He outlined the extreme economic difficulties faced in 2017 where the first three quarters suffered from a 1.6% contraction, adjusted for inflation, with a 43% drop in value addition from construction and 7% decrease in wholesale and retain activity as compared to 2016.
The causes of these contractions and subsequently overall economic recession were indeed multi-faceted with external conditions affecting Namibia’s exports, the severe drought that crippled the agricultural sector and manufacturing sector and policy decisions which hampered domestic demand.
Total revenue amounted to N$ 56.7 billion which is fairly similar to that of last year and represents a stabilizaing from the governments perspective. Revenue was largely generated through taxes, approximately 90%, while the next big bulk comes from the receipts received from the Southern African Union (SACU).
In terms of expenditure, Mr Brown outlined that the majority of expenditure is allocated to covering operations costs which stands at 78.7% of the budget, while expenditure towards development projects stands at a meagre 11.3%, and interest payments make p the other 10%. It is no secret that the budget allocations towards the national defense force are uncomfortably high, and Mr Brown took the opportunity to emphasise this to the Minister. Furthermore, the team at Cirrus further emphasized that the public wage bill is simply too high, while acknowledging that solutions should focus on stimulating the public sector in absorbing some of these skills.
With this, and much much more, Minister Schlettwien responded by acknowledging that he agreed that the country remains vulnerable to external shocks with reference to Namibia’s dependency on SACU receipts. He further emphasized that State Owned Enterprises (SOE’s) must be held accountable for ineffective business models, irresponsible contract commitments and a lack of transparency with the Namibian Student Financial Aid Fund (NSFAF) used as an example. He further noted that he agreed that military spending as it stands now was indeed too high, he however explained that legal commitments to contracts within research and development projects make it difficult to adjust spending.