Economic experts dive into 2020/21 budget
Shortly after the delivery of the budget statement by Finance Minister, Ipumbu Shiimi on 27 May, economic researchers opined that the budget including the growing budget deficit were in line with expectations, but that the current situation could only be explained by the COVID-19 health crisis.
Speaking at a post-budget discussion which was hosted by Nedbank Namibia and Simonis Storm Securities on 28 May , Economist, Klaus Schade urged for a clear strategy to rein in the deficit and to overcome these difficulties after years of using borrowed funds for operational expenses.
He pointed out his concern that the Ministry of Urban and Rural Development would receive nearly N$800 million less than expected, at a time when water and sanitation are more important than ever. Schade said he would have wanted to see a greater focus on infrastructure, including better provision of water, ablution blocks and electricity for schools.
Dr Jesse de Beer, UNAM economics lecturer, noted that a budget deficit would be expected during times of crisis, but that it is now quite concerning at N$20 billion vs N$7 billion in the previous budget. She too expressed concern about the enormous civil servants’ wage bill, echoing the urgency of finding a way to grow the GDP to service the increasing debt.
Dr Eddie Turner, Head of Corporate and Investment Banking at Nedbank Namibia, and calling it a “Covid-19 budget”, due to the understandable focus on health expenditure, mentioned that he was pleased consumers were not burdened with an extra tax liability.
Turner said citizens need to look beyond the current scenario and therefore cannot be reactionary in respect of the overall economic outlook. Drawing a correlation between health and education, he shared his disappointment that there had not been a greater focus on education.
“We need to create more entrepreneurs, and education is an avenue we need to look at,” Turner added.
Turner further advised that the impact on tourism not be underestimated, as the lack of foreign tourists and prevailing regional trade uncertainties significantly affect economic activity. He expressed appreciation at the fact that the SACU revenue did not dip too much, but said it will definitely dip next year due to the current lockdown.
The domestic economy contracted already during three out of the past four years and the policy frameworks to attract domestic and foreign direct investment has not been conducive. The country’s debt is projected to increase to N$117 billion, or almost 69% of GDP, while revenue will be down 14,3%.