Social spending expected to increase-analyst
Electoral pressure
Finance minister Iipumbu Shiimi will table the budget for the financial year (FY) 23/24 this afternoon in parliament.
“Since it is an election year, we are expecting social grants to increase. Whether we see an increase in public wages remains difficult to say,” says Simonis Storm economist Theo Klein ahead of the national budget to be tabled in parliament this afternoon.
Finance minister Iipumbu Shiimi during the mid-term budget review announced that expenditure projections have accounted for N$97 million to increase the disability grant for beneficiaries under the age of 18 from N$250 to N$1 300, effective the financial year (FY) 2023/24.
In addition, further provision has been made to increase the monthly old age grant and the disability grant as well as the orphan and vulnerable children grant by N$100 effective in the financial year (FY2023/24), should resources permit.
Moreover, an allocation has been made for the National Census to be undertaken in FY2023/24.
“”We look forward to receiving confirmation that the Namibia Statistics Agency will receive funding from government to conduct the population census. This will provide economists, social programme managers and any analyst or investor interested in Namibia with an update on key socioeconomic indicators. The last census was conducted in 2011 and so it is long overdue for an updated census to be done,” Klein said.
Revenue
At the mid-term budget review for the FY22/23, revenue was revised upwards by about N$4.4 billion to N$64.1 billion.
According to Danie van Wyk, head of research at IJG Secutities, “We expect the Ministry of Finance to indicate whether the optimistic revenue projections at last year’s mid-term budget are still expected to hold. At the mid-term budget, the Ministry forecast that debt-to-GDP is set to peak in 2023/24 and that future budget deficits will decline at a significant pace to an almost balanced position in 2025/26.
“We expect the majority of the coming year’s deficit to again be funded through domestic debt issuance, as the Ministry has indicated in the past that they want to accommodate the robust demand for government bonds and treasury bills in the domestic market.”
Another optimistic forecast at last year’s mid-term budget was that the development budget was projected to grow by 21.9% in 2023/24 to N$6.67 billion, after initially showing a decline last February. “We expect the budget to indicate whether this will still be the case, or whether it has been re-allocated to the operational budget,”van Wyk said.
Tax
“We are expecting to see improved tax revenue collection due to improved economic growth rates recorded in the first three quarters of 2022, as well as tax collection efficiency gains realised from the Namibia Revenue Agency (NamRa). Already in October, revenue was at 51% of the budgeted target which was the highest in the last three financial years. It can therefore be that revenue comes in higher than initially expected,” Klein said.
“We are expecting income tax rates to remain unchanged, with no new tax benefits to be announced.”
“We want to know when the new minimum taxable income will be increased from N$50 000 per annum to N$100 000 per annum as announced last year. Namibia has not adjusted its tax brackets for inflation for far too long. This is a standard global practice and it boggles the mind why we are not doing it in Namibia. We estimated that about 11 300 Namibians have been pushed into a position of being eligible to pay taxes due to receiving inflation adjusted salary increases each year since 2010 and now receive annual salaries above N$50 000 per annum.”
Development
According to local independent analyst Josef Sheehama, “we expect a change in policy direction focusing more on infrastructure, manufacturing and agriculture to address unemployment, cushion citizens facing flood and special reserves of the victim.”
Furthermore, the human capital development programme, that covers key sectors of education, health and green hydrogen technologies are projected to take the largest share amounting, followed by security, integrated transport infrastructure, services and agriculture. Recognizing and correctly valuing the performance, critical importance and increasing role of agriculture in economic development have important implications for public sector budgetary allocations and actual expenditures in agriculture, which continue to be low and inadequate, Sheehama added.
“We need to understand that the manufacturing sector is a big employer of both skilled and unskilled labour. Therefore, we need to protect and grow our manufacturing industries by funding them, placing huge taxes and levies on imported goods, creating policy that would encourage more production and getting our infrastructure up to date,” Sheehama [email protected]
Finance minister Iipumbu Shiimi during the mid-term budget review announced that expenditure projections have accounted for N$97 million to increase the disability grant for beneficiaries under the age of 18 from N$250 to N$1 300, effective the financial year (FY) 2023/24.
In addition, further provision has been made to increase the monthly old age grant and the disability grant as well as the orphan and vulnerable children grant by N$100 effective in the financial year (FY2023/24), should resources permit.
Moreover, an allocation has been made for the National Census to be undertaken in FY2023/24.
“”We look forward to receiving confirmation that the Namibia Statistics Agency will receive funding from government to conduct the population census. This will provide economists, social programme managers and any analyst or investor interested in Namibia with an update on key socioeconomic indicators. The last census was conducted in 2011 and so it is long overdue for an updated census to be done,” Klein said.
Revenue
At the mid-term budget review for the FY22/23, revenue was revised upwards by about N$4.4 billion to N$64.1 billion.
According to Danie van Wyk, head of research at IJG Secutities, “We expect the Ministry of Finance to indicate whether the optimistic revenue projections at last year’s mid-term budget are still expected to hold. At the mid-term budget, the Ministry forecast that debt-to-GDP is set to peak in 2023/24 and that future budget deficits will decline at a significant pace to an almost balanced position in 2025/26.
“We expect the majority of the coming year’s deficit to again be funded through domestic debt issuance, as the Ministry has indicated in the past that they want to accommodate the robust demand for government bonds and treasury bills in the domestic market.”
Another optimistic forecast at last year’s mid-term budget was that the development budget was projected to grow by 21.9% in 2023/24 to N$6.67 billion, after initially showing a decline last February. “We expect the budget to indicate whether this will still be the case, or whether it has been re-allocated to the operational budget,”van Wyk said.
Tax
“We are expecting to see improved tax revenue collection due to improved economic growth rates recorded in the first three quarters of 2022, as well as tax collection efficiency gains realised from the Namibia Revenue Agency (NamRa). Already in October, revenue was at 51% of the budgeted target which was the highest in the last three financial years. It can therefore be that revenue comes in higher than initially expected,” Klein said.
“We are expecting income tax rates to remain unchanged, with no new tax benefits to be announced.”
“We want to know when the new minimum taxable income will be increased from N$50 000 per annum to N$100 000 per annum as announced last year. Namibia has not adjusted its tax brackets for inflation for far too long. This is a standard global practice and it boggles the mind why we are not doing it in Namibia. We estimated that about 11 300 Namibians have been pushed into a position of being eligible to pay taxes due to receiving inflation adjusted salary increases each year since 2010 and now receive annual salaries above N$50 000 per annum.”
Development
According to local independent analyst Josef Sheehama, “we expect a change in policy direction focusing more on infrastructure, manufacturing and agriculture to address unemployment, cushion citizens facing flood and special reserves of the victim.”
Furthermore, the human capital development programme, that covers key sectors of education, health and green hydrogen technologies are projected to take the largest share amounting, followed by security, integrated transport infrastructure, services and agriculture. Recognizing and correctly valuing the performance, critical importance and increasing role of agriculture in economic development have important implications for public sector budgetary allocations and actual expenditures in agriculture, which continue to be low and inadequate, Sheehama added.
“We need to understand that the manufacturing sector is a big employer of both skilled and unskilled labour. Therefore, we need to protect and grow our manufacturing industries by funding them, placing huge taxes and levies on imported goods, creating policy that would encourage more production and getting our infrastructure up to date,” Sheehama [email protected]
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