Windhoek – Namibia’s Finance Minister Ipumbu Shiimi has tabled a N$67.9 billion (US$4.5 billion) 2021/2022 National Budget, while expressing optimism that the economy would rebound.
Presenting the budget to legislators this week, Minister Shiimi called for resilience in the face of the challenges posed by COVID-19.
“The budget is presented under the theme ‘Boosting Resilience and Recovery’. This theme is in resonance with the clarion call and the declaration by His Excellency the President for the year 2021 as the ‘Year of Resilience’, further summoning our resolve to insulate the capacity of the economy and the socioeconomic structure, while supporting economic recovery from the fractures impacted by the pandemic,” Minister Shiimi said.
He continued: “With public debt estimated at 76.2 percent of GDP over the coming financial year, ensuring the sustainability of our public finance is one of the highest policy priorities. This budget strikes a balance between boosting our resilience in the core dimensions of sustainable growth and anchoring the fiscal operations in a sustainable macro-fiscal framework.”
Minister Shiimi told parliamentarians that budget revenue was projected to decline by 6.1 percent to N$52.1 billion, from an estimated N$55.5 billion in 2020/21.
“The global economy has taken a severe knock in 2020, contracting by 3.5 percent. The decline in the global activity rate during the past year cut across all economic regions; severely impacting on industry, jobs and social conditions,” he said.
The minister said the dwindling revenues were largely due to the expected contraction in SACU receipts.
“Over the remainder of the Medium Term Expenditure Framework (MTEF), revenue is forecast to gather pace at an average rate of 4.8 percent as domestic economic activity and regional trade pick up,” Minister Shiimi said.
He said proposed expenditure equated to 36.8 percent of GDP, or 5.8 percent lower than the N$72.1 billion in 2020/21.
“This proposed expenditure outlay allows us to respond optimally to the aftermath of COVID-19, providing for targeted funding to support economic recovery and for the provision of essential services including non-interest operational expenditure is budgeted at N$53.9 billion, corresponding to 29.2 percent of GDP, the development budget stands at N$5.6 billion or 3.0 percent of GDP,” he said
Minister Shiimi said the budget deficit was estimated at 8.6 percent of GDP and was projected to decline to about 5.5 percent by the end of the MTEF.
“The deficit will be financed through a combination domestic and external borrowing, as a result of increasing financing requirements, public debt would rise to about N$140.8 billion or 76.2 percent of GDP in 2021/22 and would remain elevated over the MTEF. Debt is projected to stabilize at about 84.6 percent in 2025/26.”
He said the proposed expenditure would allow the government to respond optimally to COVID-19, providing for targeted funding to support economic recovery and provision of essential services.
The minister allocated more than 30 percent of the budget to social development programmes, primarily health and education
“The Ministry of Health and Social Services is allocated N$8.1 billion, this is 13.6 percent of the total non-interest expenditure to, among others, support the national response on COVID-19, the associated roll-out of the vaccination plan, acquisition of pharmaceuticals and continued provision of services countrywide, the Ministry of Education, Arts and Culture receives N$13.8 billion, equivalent to 23.2 percent of the total allocation,” he said.
“Higher Education, Technology and Innovation is allocated N$3.1 billion or 5.3 percent of the total allocation,” the minister added.
He said the Ministry of Gender Equality, Poverty Eradication and Social Welfare had been allocated 9.2 percent of the budget, mainly to fund social safety net programmes and to support the fight against gender-based violence.