Namibia 2014/15 National Budget: SACU boosts revenue, while salaries push up expenditure


Windhoek ‑ Namibia will boost total revenue collection to R52.5 billion in the 2014/15 fiscal year from R43.8b last year and to an average of R59.08b over the next three years, as it strengthens collection mechanisms.

The revenue position this year received a major boost from the Southern Africa Customs Union (SACU) revenue sharing pool in which Botswana, Lesotho and Swaziland are also benefitting from.

Namibia's share of revenue from the pool is estimated at R18.1b in 2014, constituting 34.7 percent of the country's total revenue collection, Finance Minister Saara Kuugongelwa-Amadhila told lawmakers in the National Assembly last week Wednesday while presenting the national budget.

Despite warning that Namibia's revenue position faces a “significant risk” due to the “uncertainty regarding the future of SACU revenues due to ongoing reforms” Kuugongelwa-Amadhila raised total government expenditure by 26.7 percent to R60.28b in the 2014/15 financial year.

Total government expenditure is expected to average R64.92b over the next three years, the finance minister said.

Government operational expenditure will rise to R48b from R37.2b last year.

“The increase is mainly due to the salary increase for civil servants, as agreed with unions, and the job evaluation and re-grading. Operational budget includes a total of R9.5b earmarked for transfers to state-owned enterprises, mainly for infrastructure development in the energy and transport sectors,” Kuugongelwa-Amadhila said.

Namibia says it will this year narrow its budget deficit to 5.4 percent of gross domestic product (GDP) from 6.4 percent last year. Budget deficit will moderate to an average of 3.5 percent over the coming three years, she said.

“Government intends to finance the deficit mainly from borrowing from the domestic market,” Kuugongelwa-Amadhila said.

Government would further seek to reduce the budget deficit as a mechanism “to mitigate against potential impacts of revenue risks”.

Total debt stock is expected to rise by 27 percent to R38.5b in 2014 and will be brought down to 26.8 percent of GDP in the medium term.

Kuugongelwa-Amadhila defended the rise in debt stock, saying at below 30 percent of GDP, it 'is still manageable'.

“The fiscal policy stance is to rebuild fiscal buffers, while providing needed budgetary support to strategic priorities.

“We also aim to follow the fiscal consolidation path by reducing the budget as a mechanism to mitigate against potential impacts of revenue risks and to continue with measures to strengthen efficiency in tax administration and revenue collection,” she said.

To build Namibia's narrowly diversified industrial base, government would support private sector and industrialisation “through expanded access to development finance and targeted incentives”.

“We have decided to identify internal savings and rationalise non-essential expenditure within the (budget) vote so as to reinforce allocations to expenditure needs of a capital and development nature,” Kuugongelwa-Amadhila said.

To broaden revenue base, Namibia would start implementing environmental taxes and taxes to promote domestic value addition would be introduced soon.

Non-mining corporate income tax rate has been reduced by 1 percent to 32 percent, Kuugongelwa-Amadhila said.

“Government will continue with tax reforms to enhance efficiency, broaden and deepen the revenue base and increase the competitiveness of the tax regime,” Kuugongelwa-Amadhila said.

Government would also set aside R5.3b to finance the 800 mega-watt Kudu gas-to-power plant and state-owned mining company, Epangelo Mining.

“This budget is creating an economic environment that inspires confidence and courage in investors looking for a promising future in our economy,” Kuugongelwa-Amadhila said.

“Through this budget we are incentivising economic growth, job creation and eradication of poverty. We are emboldening industrious workers to work and earn more for their own good and the prosperity of their families,” she added.

February 2014
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