Coen Welsh | Nov 14, 2017 | 0
Oh capital market named Desire, where is the sweet bird of youth?
According to my understanding, the annual budget is more or less finished by the end of November of the previous year, shortly after the Article IV Consultations when the dispatched team of the International Monetary Fund heads back home and only the seconded advisors remain.
During December and into the beginning of January, the budget receives nobody’s attention. When the civil servants slowly crawl back to their offices later in January, some minor cosmetic adjustments are made, whereupon the huge work starts of getting all the documentation printed and bound before the end of February. This last part, again according to my understanding from people involved in the process, is far more hectic and deadline driven than drawing up and finalising the preliminary budget draft in November.
It is therefore not unrealistic to assume that additional provision has been made in the budget for the expansion of the civil servant workforce, and for increasing the number of ministries, already at that point at which it was first mentioned ahead of December’s elections. It also implies the budget priorities and the allocations per vote, have been decided and incorporated into the process, some time before a new government was elected.
I can not imagine that the budget priorities have changed for the very simple reason that Namibia’s development priorities have not changed. What has fundamentally driven the process since 2003 when the first major budget overhaul took place, still remains the same. Also, the Medium Term Expenditure Framework sets a certain tone to the planned and expected expenditures. It will do nobody any good to throw this out the window and start from scratch.
I think it is reasonable to see the anticipated expansion in state expenditure as a natural function of putting in place the structure and finances required to keep the current National Development Plan on track. Once the power of the capital market was discovered and its “sweet desire” experienced, there is nothing stopping us to continue milking this source until we either outdo all other peer economies, or the market rattles us and force us to cut back.
Speculating about the detail of the budget is a bit of a time-waster. One can only say something meaningful (analytic) about it after the event, that is, once the actual facts are available. Yet, I can not foresee curbing the expenditure side regardless of what surprises there may lurk on the revenue side. I mean, that is the reason why it is so comforting to have almost unlimited access to a capital market, both here and offshore, that is only too willing to sponsor us.
Poverty eradication remains the main theme as so eloquently argued by the new president a week ago. Of course, this can also be an excuse to hide all sorts of evils like incompetence, greed, self-enrichment, corruption and what not, but I am prepared to live with the minor breakdowns in the system, if the overall execution takes us closer to our development ideals and targets. The previous finance minister was fond of referring to many of these ails as “lack of capacity.” If I consider what percentage of the budget goes into current expenditures, I certainly hope that we have created at least some capacity since 2010 when we first started on our counter-cyclical journey.
This journey, as will be remembered, has been called by several names, depending on which phase we entered but the goals have been graciously papered over by the all-powerful debt market. So why worry about a deficit or about setting an appropriate debt level when all it takes is a one-evening meeting and a unanimous decision by the top authority to up the debt level, when it is required. After all, the nominal growth rate is far more important than other small irritations like inflation, debt sustainability, and the fact that the poor gets poorer while a small number of privileged individuals gets rich beyond comprehension.
When we talk about poverty eradication, it becomes completely meaningless not to talk about fertility. I certainly hope that a substantial allocation has been made under the (extended) social programmes to set up a dedicated department to teach us the number one rule of poverty: the more unwanted children you have and that you can not care for, the longer we perpetuate national poverty. This simple and very basic observation should be made a budget priority so that we can stop relegating thousands of children to perpetual poverty, simply because the reluctant parents do not understand the very strong and primary link between fertility and poverty.