Mid-term budget review: Shiimi a ‘desperate man’
Finance Minister Iipumbu Shiimi will table the 2022/23 mid-term budget review in Parliament this afternoon.
Some analysts say he will be a desperate man and don’t know what to expect.
When he tabled the main budget in February this year, Shiimi said it focused on young people.
The N$70.8 billion budget as tabled was largely for social purposes, as the country was still grappling with the aftermath of Covid-19.
Economics professor at the University of Namibia, Omu Kakujaha-Matundu, said the minister has run out of fiscal space, which means the government has no flexibility when it comes to spending.
The budget deficit was estimated at N$11 billion and the debt level is expected to reach N$140 billion by the end of the fiscal year.
By the end of June this year, total debt had already reached N$130.3 billion.
“I think he will come to parliament a desperate man, and it is hard to predict what desperate measures he will come up with. I think he will redistribute the money from vote to vote,” Kakujaha-Matundu said.
Although there has been some growth in local economic activities, much-needed stability remains out of reach, says Kakujaha-Matundu.
“You would have expected him to spell out how he could stimulate the economy, but I don’t think he has the tools to do that,” he says.
Cirrus Capital head of research Robert McGregor says fiscal slippage remains a concern.
Reliable sources within the Treasury have indicated that the budget is likely to be increased by N$3-5 billion.
McGregor says while the shift to “balanced fiscal consolidation” will see the government increase spending somewhat in nominal and real terms over the forecast horizon, the government continues to indirectly impede growth due to a lack of reform .
“While the government has done well to stabilize the civil service wage bill over the past few years, and this effort should not be underestimated, the unplanned increase announced this year raises concerns about fiscal slippage” , he said.
The economist says fiscal sustainability remains precarious, especially given the large deficits and reliance on the domestic market to finance them.
“Fiscal slippage also raises the issue of reallocation from more productive spending (such as development spending) to operational spending, the quality and productivity of which are questionable,” he says.
Analysts have also said in the past that as elections approach, politicians must have a clear vision for the nation in order to win the votes of the masses to gain power, and this could fuel overspending on projects. unrealistic to support the ideologies of campaigning candidates, worsening the country’s fiscal space.
Shiimi is expected to be forced by his colleagues into taking on unnecessary debt, which People’s Democratic Movement leader McHenry Venaani says he will be watching closely.
“We are waiting for a bold step to relieve the Cabinet and remove the unnecessary processions that eat away at public funds. We are also expecting resources to fund the corruption that is emerging by funding the functional whistleblower office, among many others,” he says.
McGregor, however, says there is hope.
“I think the medium-term revenue outlook is improving, thanks to better mining production and therefore royalties, but also because I expect the revenue from the Southern African Customs Union in the coming years will be slightly higher than the ministry’s current forecasts.
“However, even with these increases, we will still run large deficits and remain far from reaching a budget surplus,” he said.
Venaani says that instead of the usual reallocations, he expects a refocusing of resources to fund agriculture to boost jobs and food security, and the provision of seeds and tractors to boost the mechanization of agriculture. ‘agriculture.
He says resources should be deployed to address the housing backlog.
Venaani says he’s had enough of the lip service and wants the Treasury to “walk the talk”.
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