Experts cautiously optimistic about Shiimi’s N$67.9 billion budget
Economic experts display a general tone of contentment with the 2021/22 national budget as there seems to be control in the expenditure.
On Wednesday, 17 March, Finance Minister, Iipumbu Shiimi, tabled the 2021/22 national budget in the National Assembly with a total proposed expenditure outlay of N$67.9 billion. From this expenditure, N$8.5 billion (16.3% of revenue), is reserved for debt servicing interest payments. This means that the national budget amounts to N$59.4 billion of which N$53.9 billion is operational and N$5.6 billion is developmental.
Giving their initial analysis and reaction to the 2021/22 national budget in a panel discussion organised by Nedbank Namibia and Simonis Storm Securities, experts seemed cautiously optimistic about the country’s economic recovery.
Pierre Knoetze, Executive Director of PKF Financial Consulting Services expressed appreciation that the Minister comes over as approachable.
“Hopefully, this will filter down to the Namibia Revenue Agency (Namra),” Knoetze said. “There has been a feeling that Inland Revenue is not approachable.”
Knoetze further maintained that he is happy with the general tone of the budget and that there seems to be control in the expenditure
“There’s no panic. We need to recover. We know where we are, but there’s a way going forward. People want to hear that there is fairness and that the administration of the fiscus is being taken seriously,” he said.
The panel of experts were positive about the envisaged changes in the tax regime and the prospective launch of Namra, scheduled for 7 April.
During his budget speech, Minister Shiimi reassured the public that the tax policy and tax administration reforms will aim to strengthen the fairness and equity principles of the tax system and to achieve greater compliance through effective tax administration.
Among the reforms, the Shiimi announced his intention to introduce a 10% withholding tax on dividends paid to Namibians, similar to the withholding tax provision for foreign shareholders for equity consideration. This is to be done in a manner that ensures that dividends are not taxed more than once.
The minister will also introduce a 15% value-added tax on management fees for listed asset managers, similar to that for unlisted asset managers.
Karl-Stefan Altmann, Nedbank Namibia’s Treasure and Corporate & Investment Banking Executive said if everything works out from a Namra perspective the net can be widened, and be more efficient with the people from whom tax is due.
He cautioned, however, that there must be more diligence, and called for turnaround times for value-added tax refunds to be minimised.
“That money can be turned back into the market and stimulate the economy,” Altmann said.
The experts were also concerned about public debt and the deficit, estimated at about 9.7% of GDP which is lower than the budgeted deficit of 12.5% due to better year-to-date outturn on GDP and revenue. They agree that revenue collection should be widened and improved.
Total debt is estimated at 68,8%, moderately lower than the budget.
Debt servicing is estimated at N$7.7 billion (14% of revenue), reflecting the hitherto elevated cost of borrowing; and contingency liabilities are estimated at 7.3% of GDP in relation to the 10% threshold.
Managing Director of Simonis Storm, Bruce Hansen; Nedbank Executive for CIB and Treasury, Karl-Stefan Altmann; Executive Director for FCS Windhoek, Pierre Knoetze; and Simonis Storm Securities Economist Elwis Katuwo at the panel discussion in Windhoek.