Saturday 17 April 2021
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Thorns in Namibia’s growth path

Government’s ambitious plan to fix the country’s moribund economy are facing an uphill battle due to our national competitiveness is declining due to a lack of  innovation and structural reforms in core areas.
This comes at a time when government is striving to fix state-owned companies, attract billions in investments, and restore policy certainty – all at the same time. All this has taken centre stage in the mini-budget tabled by Finance minister Calle Schlettwein in the National Assembly on Wednesday.
Schlettwein said the review is an extra component to enhance transparency as well as to provide further information of the medium-term policy solutions and spending priorities for the next MTEF.
The minister stressed that the budget review was presented against the background of the progress that the country has made, challenges it is facing and the opportunities available to grasp.
One of Schlettwein’s primary concerns is the fact that the fiscal impact of the high budget deficit and financing needs are weakening the economy, hence the need for fiscal policy responsiveness and fiscal consolidation.
“Fiscal consolidation reduces public expenditure and therefore has a negative impact on the domestic economy.
The limited fiscal space left available, requires us to revisit our fiscal and economic policies and our institutional arrangements to ensure that we can emerge from the current economic challenges,” he said.
He also reiterated the importance of investment-led growth instead of consumption-led growth.
The minister has recommended savings from non-core operational spending lines and development projects with a low budget implementation rate, adding that the allocative efficiency is increased by a reallocation of resources to those areas where they will make a difference.
Schlettwein urged his fellow Namibians to strengthening allocative efficiency to ensure that critical service delivery is not impaired by the economic crisis.
He said cynical downswings in the domestic economy provided a platform for reboot their toolkits and strategy for more medium to long-term sustainable socio-economic outcomes.
Schlettwein said that in the past three decades, the nation has made a huge significant progress in the investments in social capital, policy initiatives in education, health services and social safety net programs which contributed in reduction in inequality and poverty.
“Inequality is the second highest in the world. Although, it has fallen from 0.70 in 1993/4 to 0.56 in 2015/16”, he said.
While the foreign reserves has jumped to 5.2 percent in the months of import cover in September this year, he said “we have not emerged unscathed.
High financing needs and liquidity constraints in the domestic economy have hindered the implementation of a steadier and growth friendly fiscal stance.”
“Potentially low growth this year requires us to revisit our policies”, the finance minister said.
On Wednesday during his mid-year budget review and medium-term budget policy statement, Schlettwein stated that per capita incomes are failing when domestic growth declines and the economic outlook weakens.”
Schlettwein told fellow MPs that a package of policy proposals and spending priorities for the 2019/20 budget and MTEF are proposed to enable both the legislature and the public to make proper inputs.
Schlettwein said the weak growth in neighbouring trading partners has unfavourably impacted on the domestic economy and he believed it will continue to have an influence.

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