Search
Sunday 21 April 2019
  • :
  • :

Cash crunch intensifies

By Staff Reporter
Government is pulling all stops to avoid a financial catastrophe after Treasury instructed the national TenderBoard not to award any tender until the 2016/17 budget is reviewed. Finance minister gave this directive in a letter addressed to tenderboard chairperson Ericah Shafudah on Monday. “In line with the budget policy stance for the FY2016/17 Mid-Year Budget Review and the FY2016/17-2018/19 MTEF[medium term expenditure framework], Treasury wishes to provide the following directives to the Tender Board. No tender award should be made, until such a time that the FY2016/17 Budget Review and the re-prioritization of capital projects are finalized and similarly all new tenders for feasibility studies for the capital projects and/or surveys envisaged under the operational budget should put on hold,” directed Schlettwein.
Shafuda, who works as the accounting officer for the finance ministry, was also directed together with other accounting officers to ensure that the directives also applies to new capital projects that are funded under the national but fall under their respective offices, ministries and agencies.
“The above measures are aimed at placing public finances on a sustainable path as Government adjusts to a changing macro-fiscal environment. The measures are to be implemented with immediate effect,” he said.
Schlettwein’s directive comes days after Fitch Ratings agency’s decision to revise Namibia’s outlook to negative from stable has validated what many Namibians have been trying to tell Government in recent months-that the manner in which the country’s finances are being handled is unsustainable.
Although the revision does not automatically lead to a ratings downgrade, economists have warned that the revision must be an eye-opener to those managing the national purse.  Fitch Ratings has revised Namibia’s Outlooks to Negative from Stable while affirming the Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at ‘BBB-’. The issue ratings on Namibia’s senior unsecured foreign- and local-currency bonds are also affirmed at ‘BBB-’.  The economic turbulence that     Namibia is currently battling is far from over however, and despite Treasury pulling all stops to assure the public, investors and businesses that Government has the situation under control and that a ratings downgrade will not hit Namibia. Schlettwein however blamed the changed outlook on the decreased SACU revenue, slowdown in domestic revenue and the crash of oil prices which impacted Namibia’s trading partner Angola severely. “The deficit did not increase because of additional spending, but rather because of a shortfall of revenue that forced us to borrow more to fund the budget,” he explained at the time.
His Cabinet colleague, Economic planning minister Tom Alweendo, defended government saying the current economic situation of the country is not a result of wrong policies adopted in the past but rather because of a changing economic environment. “The central message is that we find ourselves in a changed economic environment. The situation is not brought upon because the policies that were followed were wrong, but because times have changed,” he said adding that cutting expenditure should not be done to the detriment of the economy.” Despite these assurances, Namibia’s eyes will now have to look across the border to South Africa  that has been on a ratings watch since the beginning of this calendar year and a potential downgrade in South Africa later in the year will have a negative impact on Namibia’s ratings as well. Last week Fitch also revised the outlook of four local parastatals namely-Telecom, NamPower, NamPort and NamWater from stable to negative.




Leave a Reply

Your email address will not be published. Required fields are marked *