Policy Implementations key to economic recovery- Schlettwein
Finance Minister Calle Schlettwein delivered the 2019/20 Budget totaling N$66.5 billion on Wednesday, 27 March in Parliament.
This budget shows an increase of 2% from the N$65 billion availed in the 2018/19 financial year. The development budget is increased by 42.2%, to N$7.9 billion from the revised N$5.6 billion the previous year, to give greater impetus to economic growth.
Schlettwein delivered an optimistic economic outlook, projecting that the domestic economy will likely emerge from recession in 2019, expecting GDP growth to reach up to 1% from a contraction of between 0.2 and 0.5 in 2018.
“The pace and quality of the recovery is dependent on the speed and scale of implementation of pro-growth policy interventions, but may also be influenced by external factors,” he said.
Schlettwein added that in a baseline scenario, if no policy measures are implemented, GDP growth is estimated at 0.2% in 2019 and improve to approximately % by 2021. However, he stressed that the outlook could improve to approximately 1.2% this year and reach 2.2% in 2020 if it is supported by timely implementation of supportive policy measures.
“On the demand side, the recovery is expected to be led by increased exports from the mining sector, increased investment in public infrastructure and a soft recovery in aggregate consumption expenditure. With aggregate public spending generally flat, private investment inflows are necessary to lift the growth potential of the economy,” Schlettwein said.
Meanwhile, in terms of taxes, the Namibian Revenue Agency which was earmarked for establishment on 1 March 2019 has been moved further to the 1st of October 2019.
Schlettwein said that the tax proposals for domestic revenue purposes are anticipated to generate approximately N$400 million, adding that income tax changes will come into effect in 2020 after drafting and tabling of the specific tax proposals. Excise duties will become effective upon the tabling and gazetting of the schedules.
Excise levies and duties implemented are; increase the fuel levy by 25 cents per litre for all levied fuel products, expanding the coverage of export levy to include other specific agricultural, forestry and game products and other mining products currently not covered, the increase in the export levy for dimension stones from the current 2% maximum to 15% and the introduction of an export levy of 15% for timber.
The taxes proposed during the prior budget have not been implemented but rather postponed. Simonis Storm Securities Analyst, Indileni Nanghonga said that this seeks further public engagement given a major pushback from the public on the implementation of the proposed taxes.
“We believe that it was the best course of action especially in an environment where the consumer and business sectors are in distress. This provides some temporary respite to the public,” Nanghonga said.
Meanwhile, excise duty on beer goes up by 12 cents to N$1.74 while excise duty on a 750ml bottle of wine goes up by 22 cents to N$3.15 and excise duty on a 750ml bottle of Sparkling wine goes up by 84 cents to N$10.16. Excise duty on a bottle of whiskey will go up by N$4.54 to N$65.84 while a pack of 20 cigarettes goes up by N$1.14 cents to N$16.66 and excise duty on a typical cigar will go up by about 64 cents to N$7.80.
Nanghonga noted that the proposed tax amendments to be tabled, contribute to the cloud of uncertainty, majority being not pro-investment.