Saturday 17 April 2021
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Economic meltdown not Presidents’ fault – economist

Economist, Milner Siboleka of First Capital says the economic downturn that has hit hard the Namibian populace is not a pet project of the current or former Heads of State.
He said this in an interview with The Patriot on Wednesday this week.
First Capital released a report recently on Namibia’s Fiscal Policy Analysis which states that the country should increase efficiency on the current expenditure levels in order to increase output with similar resource allocations.
The report also added that government expenditure increased significantly from N$2,2 billion in 1990/91 to N$65 billion in 2018/19, showing an average annual increase of 12%.
Expenditure as a percentage of gross domestic product (GDP) also hiked from 29,4% in 1990/91 to a peak of 40,7% in 2015/16.
He said that at independence the inflation, interest rates, unemployment as well as poverty were very high and government had bring in macro economy to pursue fiscal policy to address the social challenges.
“Shortly after independence the economy was growing in the negative territory and again it was at that moment when inflation was at its highest level. Interest rates were high, poverty and unemployment were also high and at that moment in time the country was confronted with those challenges they had to bring macro economy.
So they have taken tough decisions, they had to pursue fiscal policy expansion so to address those.”
He added that at independence government had to use fiscal policy to build institutions such as schools and hospitals to bridge the gap between the rich and the poor because inequality was very high at the time.
According to him, in 1990 government was also forced to use its expenditures to create employment in cross-stimulating sectors which could also create more employment opportunities.
“We have seen the economy start picking up by the time he [Sam Nujoma] gave over power to President Pohamba.
The economy grew up at 12 percent, in 2004 though that was a short-lived growth because we all know that it was on the verge of the expansion in the mining sector but the economy was stable.
If you look at the indicators, did they reduce unemployment, did they cross the gap that was very wide between the rich and the poor, and did they improve in terms of education and health care services?
Exactly they have done that. They have achieved some of their targets,” he said.
At the end of his term in 2005 Sam Nujoma had achieved the goals of fiscal policies and he had laid a foundation for macro-economy and the inflation and interest rates had gone down.  At the time he took the inflation was at 20 percent.
Siboleka said from 2010 when the country’s debts to GDP ratio went up drastically, it was because the country needed a stable currency so that the country could realise stable prices so that economic agencies, consumers and business could realise their medium and long term goals.
He said when former president Hifikepunye Pohamba came into office, he had to grow and change the structure of the economy.
In 2010, he claims even though government took a stance to target key sectors and resources were allocated, the challenges remain and debt levels were raising and by the time he [Pohamba] left office the GDP to debt ratio rose above 35 percent.
He attributed this to programmes like Targeted Intervention Programme for Employment and Economic Growth (TIPEEG) that was launched to create around 104 000 jobs. “One thing that we need to appreciate is that an economy moves in circles.
When Geingob took over in 2015 the economy was already contracting, it was already coming down and most time when the economy comes down you need to sustain the projects.
There are commitments that were signed by 2015.
They could not overlook those commitments that government had to honour.
We all know that around 2015, ‘16 and ‘17 some people, like in the construction sector had taken government to court.
Government was faced with the reality to honour some of the commitments and because revenue was coming down, the way out was to borrow.
The question is now, did government borrow to fund the new projects.
What we have seen is they had to finance existing projects, it was at that time when free education was also introduced. That commitment had to be honoured.”

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