Government Must Move to Genuine Three-Year Rolling Budget

THE Institute of Public Policy Research (IPPR) has recommended that the Ministry of Finance move towards a genuine MediumTerm Expenditure Framework that will set three year funding plans based on well assessed projects and priorities.

The IPPR said in its 2014 budget review released on Friday that the government would then be required to strictly adhere to such a system as is the case in in neighbouring Botswana.

The institute said this process of budgeting will require that a ground up budgeting process is set in place, and it is recommended that this ground up budget construction is carried out every three years.

PROPERLY DESIGNED

The think tank said this process should be ongoing, and the budget teams within the Ministry of Finance and that National Planning Commission should use the three years between budgets to properly design and appraise projects best suited to achieve the country’s development plans.

“Additionally, it makes sense to change the duration of the National Development Plans from five years to six years so as to coincide with two full Medium Term Expenditure Framework periods, so as to allow budgeting to align with development plan cycles.

Budgeting should be a full-time activity in the Ministry of Finance, and now that the 201415 budget has been tabled, the Ministry should start to work on some of these issues for the 201516 budget,” the IPPR said.

It said such a move would avoid the mad scramble towards the 2015 budget tabling and that expenditures could be more comprehensively appraised and audits could be carried out.

MISLEADING

On 19 February, the Minister of Finance, Saara Kuugongelwa-Amadhila, tabled her national budget to parliament. The IPPR charged that the title of the budget “Fiscal Sustainability and Job Creating Growth, Doing More with Less”, was some what misleading.

“Far from ‘doing more with less’, the current budget sees the largest expenditure expansion since 2011 and the second largest growth in expenditure since independence,” the IPPR said.

This major increase in expenditure is on account of increases in personnel expenditure, transfers to state-owned enterprises (SOEs), acquisition of capital assets (primarily vehicles), and development activities, and no doubt is also largely due to the stage of the political cycle in which Namibia currently finds itself, the institute said. General elections are due to be held this year.

The budget deficit is projected to be N$7,6 billion for the 201415 financial year or 5,4% of projected GDP.

SILENT

The IPPR noted that following a number of years of increased spending on account of the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG) public works programme, this year’s budget speech was generally silent on the subject of the counter cyclical intervention. It said the development budget sees yet another increase in the current budget allocations but continues to represent a smaller and smaller percentage of overall expenditure, falling well below the targeted 20% of total expenditure target.

“The current budget, as with many that went before, suffers a number of sizable problems, many of which are administrative in nature, rather than specific to funding allocations. Among these administrative failings is the failure to synchronise the budget with the National Development Plan (NDP4),” the IPPR said.

In addition, given that the final budget figures often differ by more than 40% from the first estimate for a financial year, it is clear that the three year budgeting programme envisaged in the Medium-Term Expenditure Framework is not functioning as it should, the institute noted.

“The yearly revision of previous budget estimates tends to create uncertainty,” it said.

Source : The Namibian