Government’s long-term revenue position remains a question mark despite the better-than-expected revenue collected, as economists are concerned about the ‘daunting’ reality of the country’s high debt levels.
On Tuesday, Finance Minister Iipumbu Shiimi tabled the 2022/23 mid-term budget review of N.dollars 65.6 billion that was made possible by improved revenue collection which stood at N.dollars 30.4 billion by September 2022 from better-than-expected individual income taxes, corporate income tax, value added tax and dividends from Debmarine Namibia.
First National Bank (FNB) Namibia Economist, Ruusa Nandago told Nampa on Wednesday that the use of better-than-expected revenues to cushion the economy in the face of the cost-of-living crisis is a welcome policy development, however fiscal challenges remain daunting in the face of high debts levels.
According to Shiimi the public debt stock is expected to increase to N.dollars 138.4 billion, equivalent to 69.6 per cent of Gross Domestic Product (GDP) in 2022/23, with debt servicing costs surpassing the 10 per cent sustainability threshold.
“The mid-term budget review relief measures will be beneficial in the short term, but it remains a priority to improve the growth potential of the economy over the medium to longer term, to put Namibia in a better position to withstand economic shocks,” Nandago said.
She further said most notable measures offering some relief from inflation rates headwinds included the upward revision of expenditure ceilings to account for the 3 per cent salary adjustment which will cost the government N.dollars 1.3 billion and was already implemented on 14 October 2022, an increase in the monthly Conditional Income Grant (CIG) for former food bank recipients from N.dollars 500 to N.dollars 600 (effective October 2022) to cushion the most vulnerable members of the society against rising food prices.
Equally, N.dollars 97 million has been incorporated to increase the Disability Grant for beneficiaries under the age of 18 from N.dollars 250 to N.dollars 1 300 as well increase the monthly Old Age Grant, the Disability Grant and the Orphan and Vulnerable Children Grant by N.dollars 100, all effective from the 2023/24 financial year.
Economist in the Ministry of Mines and Energy’s Directorate of Petroleum Affairs, Abednego Ekandjo, said increases in the operational and capital budgets are evidence that the government is adjusting its spending for inflation.
“Government will either have to end up borrowing more or raising taxes to fund its expansionary fiscal policy, provided that the new financing gap will not be filled by cutting expenditures elsewhere,” he said.
Source: The Namibian Press Agency
