Mid-term budget draws praise
Positive shift noted, analysts say
The mid-term budget has seen a shift in how government goes about its finances, Cirrus Capital says.
Finance minister Ipumbu Shiimi’s mid-term budget has received praise for shifting the focus away from re-budgeting and towards making provision for emergencies and reinforcing policy stances.Research firm Cirrus Capital, in its analysis of the budget, noted that this approach marks a positive shift in the government’s handling of the budget compared to previous years.
“The mid-year review now seems to be focused on providing an update on spending year-to-date, provisioning for emergencies or other occurrences and reinforcing policy pronouncements,” Cirrus said.
“This marks a positive shift from the ‘re-budgeting’ that had become the norm, as well as unexpected policy announcements that had often been made at this juncture in years gone by,” it added.
Positive trends reinforced
The mid-term budget continued the positive trend set by the full-year budget tabled in February and aims to address issues concerning the citizenry.
“This budget, much like the full-year budget tabled earlier this year, was encouraging as the ministry of finance remains focused on correcting some of the previous missteps and addressing issues that concern Namibians today,” Cirrus said.
“The country has recorded strong growth and is expected to have strong growth over the medium-term expenditure framework (MTEF), and this has continued to serve as a benefit to the fiscus,” it added.
Declines in Namibia’s deficit to gross domestic product (GDP), debt-to-GDP and interest payments also bode well for the government’s ability to prioritise certain expenditures, Cirrus said.
“Deficit-to-GDP is expected to decline to 2.7%, debt-to-GDP is expected to decline to 56.3% and interest payments are expected to reach 14.4% of revenue by the end of the MTEF. The burden of debt has been reduced because of a keen focus on debt stabilisation and a prioritisation of expenditures,” Cirrus said.
On the right path
Government’s fiscal behaviour is welcoming, Cirrus noted.
“Overall, Namibia continues to walk down the right path," Cirrus said, adding: "In our view, government revenues continue to outperform expectations, there is some restraint on frivolous expenditure, and the government has opened the door to tax reform.”
Namibia would also benefit from the repricing of local debt in the face of increased investment in the country.
“Furthermore, the country has also benefitted from a continued repricing of local debt, opening the door to investment in productive assets and significantly changing Namibia’s growth outlook relative to their southern neighbours. Once again, the path ahead is uncertain, but current circumstances are promising and Namibia ought to take advantage of those opportunities by being prudent and proactive,” Cirrus said.