Guest Contributor | Feb 20, 2024 | 0
Poverty stays on budget radar
Namibia’s third president, His Excellency Dr. Hage Geingob declared a war on poverty when he addressed an excited crowd at the Independence Stadium in Windhoek last weekend during his inauguration.
The war on poverty will most likely shift government spending towards more and sustained pro-poor initiatives.
This is the view of analyst Daniel Kavishe of Simonis Storm Securities who shared his expectations ahead of the budget speech next week Tuesday.
“It is difficult to try to predict what the budget will enshrine since we now have a new president, cabinet and finance minister.
The theme for the current president is Poverty Eradication and we expect that over the medium term, government spending will be aligned to the implementation of this vision,” said Kavishe.
“There will be an additional allocation to “poverty eradication,” but it is unknown how the government has decided to go about this.
If it is only through social grants and programmes then we will see a large increase in that area.
If the government wants to achieve this through industrialisation or other economic developments then more funds will be channelled to support industrialisation,” added Kavishe.
He is fairly certain that government spending will balloon and that government borrowing would possibly exceed 30% of Gross Domestic Product during the 3-year Medium Term Expenditure Framework (MTEF) period.
Said Kavishe, “Our expectation is that the new ministries will need a budget allocation therefore increasing operational expenses, although some existing ministries were split in two, and the Planning Commission was elevated to ministry level which should curb the increase. We do not foresee a drastic increase in operational expenditure.
“However we expect continued increase in spending on infrastructure: This is in line with the [fourth] National Development Plan, an industrialisation drive and Vision 2030.
“Spending is likely to be on roads, rail, housing, water and electricity.
“Provision must also be made for drought relief.
“We also expect above inflation increases in social grants and programmes.”
Added Kavishe, “We are also not expecting much in the way of increased tax rates or new taxes, but we do expect the Ministry of Finance to continue with widening the tax net to improve collections.
Presumptive tax may be mentioned again during the minister’s speech.”
The Ministry of Finance in 2014 announced the creation of a revenue collecting agency, mimicking the role of similar institutions in Botswana and South Africa.
Said Geingob during his inaugural address last weekend, “People have high expectations. They want food, shelter and clothing.
“They want a leader to act quickly, thus the challenges must be met. People cannot eat a constitution or democracy and our first priority is to declare war on poverty and inequality. “We will have a brand new ministry. The ministry of poverty eradication.”