What to know about Shiimi’s midterm budget review

The Minister of Finance and Public Enterprises Iipumbu Shiimi says a broad policy of prioritising unforeseeable and unavoidable emergencies was adopted while drafting the 2023-2024 midterm budget review.

He said the Treasury received a request for additional expenditure of N$5.3 billion from various ministries and agencies. 

After careful consideration, Shiimi said the operational budget was increased by N$2.5 billion, while the development budget remains unchanged at N$6.5 billion, whereas an additional N$2.3 billion is allocated to debt servicing and honouring of contingent liabilities.

In February, Shiimi tabled an N$86.4-billion budget consisting of N$66.1 billion in operational expenditure, N$6.5 billion in development expenditure, N$2 billion of projects (to be funded outside of the State Revenue Fund) and N$10 billion in interest payments.

"The development budget remains, even though the execution rate on the development budget at mid-year stood at 32.6%. As a result, we have reallocated a total of N$167.3 million from lagging projects to address urgent development priorities including N$129.7 million to expedite the construction of classrooms countrywide,” he said, as he presented the budget in Parliament.

“Also, the allocation for interest payments has been increased significantly by N$1.7 billion to meet anticipated shortfalls as the interest-sensitive component of the debt portfolio reprices at higher rates." 

An additional N$602.8 million has been set aside under other statutory payments to honour calls on loan guarantees, he added.

"We have noted strong revenue performance which resulted in an upward revision of the collections for FY2023/24 by N$3.8 billion. As such, consideration was made to keep additional expenditure broadly aligned to the anticipated additional revenue collections. In addition, given the low execution rate on several projects, a total of N$167.3 million was identified for re-allocation across votes within the development budget," Shiimi said.

Therefore, to keep up with the fiscal sustainability narrative, he said the Treasury had to balance the expenditure requests against the available resource envelope, cognisant of the imperative to manage the borrowing requirement.

N$1.2 billion has been allocated to subsidies and other transfers to Government organisations inclusive of N$376.3 million to cover shortfalls in student funding at NSFAF; while N$230 million was made available to support TransNamib’s operations.

A further allocation of N$200 million was set aside to meet an anticipated deficit in the Public Servants Medical Aid Scheme (PSEMAS).

Furthermore, Shiimi said N$105.3 million was budgeted to supplement the contingency budget and a further N$87.5 million for Namibia’s contribution to the deployment of the SADC mission in the Democratic Republic of Congo.

A total of N$643 million was set aside to supplement the drought relief provisions under the Office of the Prime Minister covering both food distribution as well as support to affected farmers.

"…N$438.5 million was added to the goods and services budgets of various votes including, among others, N$250 million to supplement the pharmaceutical budget at the Ministry of Health and Social Services, N$40 million to complement the special fund for uncommon diseases, N$25 million to the Ministry of Justice to cover escalating legal costs and supplement the Legal Aid budget; as well as N$17 million to the Ministry of Environment, Forestry and Tourism to support anti-poaching activities," he said.

"Going forward, the OPM has started piloting an alternative drought relief delivery mechanism through utilising vouchers so as to minimise the associated administrative costs, consequently creating an opportunity to make more food available to vulnerable people; furthermore, we are engaging the farming community and other relevant stakeholders such as Agribank and Meatco to explore further measures to assist farmers to better cope with the prevailing drought situation," he added.

A further allocation to the tune of N$14.5 million was made available to the Ministry of Sport, Youth and National Service for undertaking youth empowerment projects and the youth credit schemes. 

Shiimi then used the opportunity to dispel the misconception that the government is not prioritising funding sports activities.

"In the previous financial year, FY2022/23, we allocated N$50 million for the upgrading and renovation of the Independence Stadium in order to meet the requirements for hosting international fixtures.  Again, in the current financial year, we have allocated N$37.5 million to the Independence Stadium project.

"Furthermore, N$60 million and N$65 million are committed in the MTEF for FY2024/25 and FY2025/26, respectively. I, therefore, would like to make it clear that the problem with upgrading the stadium has never been a lack of money but rather slow execution. We therefore need to adopt a collective Government approach to fast track the renovation of our sports facilities," the Minister said.

In terms of tax relief, the Minister said the non-mining company tax rate will be reduced by 2% points over the next two years to 31% effective in April 2024 and a further reduction to 30% in April 2025.

In addition, the income tax threshold on individuals will increase from N$50,000 to N$100,000. An Internship Tax Incentive Programme was also introduced in which N$126 million was allocated.

These additional expenditure allocations, Shiimi said, represent the unforeseeable and unavoidable emergency items which could not be postponed until the tabling of the FY2024/25 main budget.

"These were the items we deemed unforeseeable and unavoidable and warranted additional allocation from the available resources. Nevertheless, we have broadly not reduced the initial ceilings of most expenditure votes despite noting low implementation rate during the first half of the year, particularly on personnel expenditure due to the slow pace of recruitment,” he said.

"As such, we have encouraged the votes to reallocate the savings on personnel expenditure during the first half of the financial year to meet other urgent operational expenditure that could not benefit from additional allocations. “

Notably, Shiimi said there is an urgent need to redouble efforts to mobilise domestic revenues to further enhance fiscal resilience, even though there is some improvement in domestic economic activities despite high inflation and geo-political tensions.

"We are further concerned about increased exposure from public enterprises which erodes the fiscal space and crowd out financing for urgent developmental activities. Accordingly, we are tightening surveillance on the governance of public enterprises and where necessary taking actions to safeguard the sustainability of public enterprises. Lastly, we take note of the fast-rising debt servicing costs which could further erode the fiscal space available for spending on much needed social and economic infrastructure. As such, we reaffirm our commitment towards stabilising debt growth over the medium term," the minister said.

Rate this item
(0 votes)
Last modified on Wednesday, 01 November 2023 10:48

Related items

  • Namport eyes Q3 2024 to start Lüderitz port expansion

    The Namibian Ports Authority (Namport) is targeting to start port expansion at Lüderitz next year to facilitate the implementation of the country's impending oil and gas developments. 

  • NamRA eyes oil, gas and renewable sector taxes

    The Namibia Revenue Agency (NamRA) is structuring an independent auditing department that will only focus on the oil, gas and renewable sectors to curb tax evasion and maximise revenue collection in these sectors, an official has revealed.

  • EIF to conduct N$5m green hydrogen feasibility study

    The Environmental Investment Fund of Namibia (EIF), through the Green Resilient Recovery Rapid Readiness Support in Namibia, will spend N$5 million on a green hydrogen feasibility study.

  • FNB extends N$83m to entrepreneurs

    First National Bank of Namibia, in partnership with the Namibia Special Risk Insurance Association (NASRIA), has extended N$83 million to address credit limitations issues faced by aspiring entrepreneurs. 

Joomla! Debug Console


Profile Information

Memory Usage

Database Queries