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Midterm budget review: Shiimi a ‘desperate man’


MINISTER of finance Iipumbu Shiimi will table the 2022/23 midterm budget review in parliament this afternoon.

Some analysts say he will be a desperate man, and are unsure of what to expect.

When he tabled the main budget in February this year, Shiimi said it was youth-focused.

The N$70,8 billion budget as tabled was largely towards social ends, as the country was still grappling with the after-effects of Covid-19.

Economics lecturer at the University of Namibia Omu Kakujaha-Matundu says the minister has run out of fiscal space – meaning the government has no flexibility regarding spending.

The budget deficit was estimated to be at N$11 billion, and the debt level is expected to reach N$140 billion by the end of the fiscal year.

At the end of June this year total debts already reached N$130,3 billion.

“I think he will come to the parliament as a desperate man, and it’s difficult to predict what desperate measures he will come up with. I think he will reshuffle money from one vote to the other,” Kakujaha-Matundu says.

Although there has been some growth in local economic activities, much-needed stability remains out of reach, Kakujaha-Matundu says.

“One could have expected him to spell out how he could stimulate the economy, but I don’t think he has the tools to do so,” he says.

The head of research at Cirrus Capital, Robert McGregor, says fiscal slippage remains of concern.

Reliable sources in the treasury have indicated that there is a probability the budget would be increased with between N$3 billion and N$5 billion.

McGregor says while the shift towards “balanced fiscal consolidation” will see the government increase expenditure somewhat in nominal and real terms over the forecast horizon, the government keeps hampering growth indirectly through a lack of reform.

“While the government did well to stabilise the civil service wage bill in the last few years, and this effort should not be understated, the unplanned increase announced this year raises concerns for fiscal slippage,” he says.

The economist says fiscal sustainability remains precarious, particularly given the large deficits and reliance on the domestic market to fund this.

“Fiscal slippage also raises the concern of reallocating more productive spending (such as development expenditure) towards operational spending, which is of questionable quality and productivity,” he says.

Analysts have also in the past indicated that as elections loom, politicians need to have a clear vision for the nation in order to secure the votes of the masses to get into power, and this could fuel overspending on unrealistic projects to support the ideologies of the campaigning candidates, worsening the country’s fiscal space.

Expectations are that Shiimi will be forced by his colleagues to incur unnecessary debt, which the leader of the Popular Democratic Movement, McHenry Venaani, says he will keep a close eye on.

“We await a bold step to make the Cabinet leaner and cut unnecessary motorcades that eat from the public purse. We also await resources to finance the corruption that is rearing its head by financing the whistleblower office into functionality, among many,” he says.

McGregor, however, says there is some hope.

“I believe that the medium-term revenue outlook is improving, thanks to better mineral output and thus royalties, but also because I expect Southern African Customs Union revenue in the coming years should be somewhat higher than the ministry’s current forecasts.

“However, even with these increases, we will still be running sizeable deficits and will remain far from reaching a budget surplus,” he says.

Venaani says instead of the usual reallocations, he expects the refocusing of resources to finance agriculture to stimulate jobs and food security, and the provision of seeds and tractors to stimulate the mechanisation of agriculture.

He says resources should be deployed to address the housing backlog.

Venaani says he is tired of lip service and wants the treasury to “walk the talk”.

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Twitter: @Lasarus_A





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