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Kuugongelwa defends her budget
- Finance Minister says set priorities are in order

By Staff Reporter
Finance Minister, Saara Kuugongelwa-Amadhila, has strongly defended her budget in the National Assembly, saying that set priorities were in order and would go a long way in addressing the country's major challenges such as unemployment, poverty and lack of skills.

Replying to questions and contributions parliamentarians had made to the budget debate over the past few weeks, the Finance Minister said that the consultative process which went into this year's budget formulation was very participatory and exhaustive, adding that all stakeholders had a chance to make their input.


She said that Namibia's openness in budgeting formulation had been reflected in the country's improving scores in the internationally recognized Open Budget Survey, which saw the country's score rising from 46 to 55 over the past four years. Namibia is now placed third in all of Sub-Saharan Africa. "As we are faced with limited resources," she told Parliament on Tuesday, "there is a need for prioritization to ensure that Government spending remains within sustainability levels, while still addressing the important needs of the country."

She revealed that the total additional expenditure requests advanced from ministries and government agencies for 2013/ 14 alone exceeded N$15 billion, against N$6, 5 billion which could be accommodated. She added that this was the essence of budget hearings.

On the previous Medium Term Expenditure Frameworks, MTEF, the budgeted revenue for 2009/10 was N$22, 8 billion, against an outturn of N$24 billion. This gave a forecast accuracy of 94, 7 percent. For 2010/11, the projected revenue and outturn was N$22, 7 billion and N$23, 4 billion respectively. This also gave a forecast accuracy of 97, 1 percent.

For 2011/12, the forecast accuracy was 93, 6 percent, which translated in an average of 95, 1 percent forecast accuracy over the MTEF. This, she said, was in line with the target. "In spite of this achievement," she said, "We shall continuously improve on our forecasting capacity and tools," adding that her Ministry had undertaken to develop an Integrated Forecasting Model, together with human resources capacity-building exercises to serve both macroeconomic and revenue forecasting.

The Finance Minister also defended tax reductions she announced when she tabled the budget, saying that they would relieve the tax burden on individuals and businesses. Low income groups were the largest beneficiaries of this policy change. Income earners below N$180 000 per year would save as much as N$13 800 per year. The upper tax rate of 37 percent has remained unchanged, but the brackets had been defined much clearer.

On debt management, Minister Kuugongelwa-Amashila agreed with her Parliamentary colleagues that public debt needed to be stabilized, adding that the expenditure ceilings proposed in the MTEF indicated a consolidation path.

"The projected deficit is obviously a higher level than earlier projected under the previous MTEF," she said, "but it is still in line with the consolidation path and well within sustainability levels. It is important that fiscal policy not only supports the economy during periods of difficulties, but that it also addresses structural challenges and establish a solid basis for long-term sustainable growth. Otherwise the economy can stagnate."

Namibia's foreign reserves increased from N$14, 4 billion in 2011 to N$14,7 billion in 2012. She said that while this level was low compared to more mineral endowed countries, it was enough to support the currency peg. The reserves level was also above the international benchmark of three months of import coverage. This, she said, implied that Namibia could still honour its international obligations. On Air Namibia bailouts, the Minister said such information was contained under the vote of Transport. Such allocations were made for the acquisition and maintenance of the aircrafts and the lease of aircrafts

"Allocations were also made to enable the airline company to meet liabilities related to outstanding fuel payments," she said. "There was no intention to conceal this information and any lack of clarity is regretted."

She welcomed proposals to reduce the time allocated for the budget debate to allow more time for implementation, especially given the fact that Namibia had a three-year MTEF where budget allocations were known two years in advance.

"I trust that the next stages of the budget will take this into consideration and facilitate for an expedited passage of the budget," she said.





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