One of the biggest highlights for the 2019/2020 allocation is the announcement by Minister of Finance Calle Schlettwein that the development spending was increased by 42%, bringing it to N$7,9 billion compared to the N$5,5 billion in the 2018/19 financial year.
The aim of increasing the development spending budget, the minister said, is for the purposes of job creation as well as motivating the growth of the country’s economy.
Tax leader at PwC, Chantelle Husselman, told The Patriot yesterday that if debt leans towards development spending, then this is considered as productive spending which is welcomed.
She said that spending becomes worrisome if government has to take loans for operational spending such as paying for salaries as this is not money that is invested into development opportunities that will see a return of the money that was spent.
Government spending is projected to take 33,8% of the total Gross Domestic Product which amounts to N$66,5 billion. With an expected revenue of N$58,4 billion government will face a budget deficit of N$8,1 billion.
Urging the private sector to increase participation in the economy to ensure job creation and economic growth, Schlettwein said that private investment inflows are necessary to raise the growth potential of the economy.
The finance minister highlighted that government’s total debt was expected to go up to more than 46% of the Gross Domestic Product at N$87,5 billion when the 2018/2019 financial year draws to an end.
That amount is expected to rise by more than two percentage points of the Gross Domestic Product to bring government’s debt for the 2019/2020 period to a projected N$96,2 billion.
This will continue to increase to 51% of the Gross Domestic productive (N$104,8 billion) the 2020/2021 financial year, while the 2021/2022 financial year will see this amount going up to N$112,3 billion which represents 52,3% of the Gross Domestic Product.
The budget further indicated that government spending is projected to amount to 32,7% of the Gross Domestic product in the next financial year making it N$67,1 billion. For 2021/2022 the amount will be N$67,8 billion, which is 31,6% of the Gross Domestic product.
A revenue total of N$59,9 billion is projected for the next financial year, while government income is expected to be N$61,8 billion for 2021/22.
When it comes to budget deficit, 2020/2021 is expected to see a deficits of N$7,2 billion representing 3,5% of the Gross Domestic Product, while 2021/2022 is estimated to see a decreased budget deficit of N$6 billion, representing 2,8% of the Gross Domestic Product for that year.
Government is expected to spend almost N$30 billion for the 2019/2020 financial year.
The Ministry of Basic Education, Arts and Culture received the biggest piece of the pie with a N$13,7 billion allocation, followed by treasury with an allocation of N$10, 8 billion.
Schlettwein on Wednesday evening said that the Ministry of Finance has received the second highest amount because they have to cater to various other entities and projects.
“Our operational budget has in fact reduced,” the minister said.
Third in line was the Ministry of Health and Social Services which has been allocated with N$6,8 billion and was followed by the defence ministry with an allocation of N$5,9 billion, while the Ministry of Safety and Security was allocated N$5,5 billion.
An amount of N$4 billion is set to go towards the Ministry of Works and Transport followed by an allocation of N$3,6 billion is to be allocated to the Ministry of Poverty Eradication and Social Welfare.
Ministry of Higher Education, Training and Innovation will receive N$3,1 billion.
The Patriot recently reported that the national airliner, Air Namibia requested for N$500 million dollars from treasury.
Schlettwein in his budget speech announced that Air Namibia will indeed be receiving N$500 million of the N$1,08 billion set to go to parastatals.
The Public Service Medical Aid Scheme (Psemas), which has also been marred with controversy, is expected to receive a budget allocation of N$2,8 billion for the 2019/20 financial year.
Schlettwein on Wednesday evening said that the scheme had been hit by major fraudulent activities that injured the scheme financially.
The elderly will be receiving an extra N$50, taking the pension benefit to N$1 250 per month.