Budget consultative approach hailed
By Hilary Mare
ELWIS Katuwo, an economist with Simonis Storm Securities has hailed the return of the consultative approach used by finance minister, Iipumbu Shiimi in drafting the 2021/22 national budget saying that consultation was the driving force behind the budget which also saw the minister engaging on social media and asking for submissions prior to its presentation.
Katuwo was speaking at a panel discussion organised by Nedbank Namibia and Simonis Storm Securities soon after the budget presentation last week.
At the discussion, the economist acknowledged that the minister’s discussions with the youth resulted in interventions for scaled-up funding for small and medium enterprises (SME) and youth entrepreneurs, for employment and wealth creation.
Consultation with the business fraternity through the Namibia Chamber of Commerce and Industry (NCCI) resulted in a conscious decision not to increase the general tax rates, especially at this point when economic recovery is a primary objective. Further public considerations were evidenced in the provision that the supply of sanitary pads will be VAT zero-rated to enhance affordability.
Furthermore, the new budget reflected requests made by the Namibia Savings and Investment Association (NaSIA) about tax deductibility on pension fund and educational policies contributions. As previously announced, this amount will be increased from the current N$40 000 to a maximum of N$150 000 in order to encourage savings for retirement purposes.
Echoing these sentiments, Pierre Knoetze, executive director of PKF Financial Consulting Services expressed appreciation that the minister comes over as approachable and that hopefully, this will filter down to the Namibia Revenue Agency (Namra).
“There has been a feeling that Inland Revenue is not approachable,” he said.
Knoetze further maintained that he is happy with the general tone of the budget and that there seems to be control in the expenditure.
“There’s no panic. We need to recover. We know where we are, but there’s a way going forward. People want to hear that there is fairness and that the administration of the fiscus is being taken seriously,” he said.
Karl-Stefan Altmann, Nedbank’s executive: CIB and Treasury also concurred saying that there is evidence of discipline from the Ministry of Finance in actual expenditure.
“One of the cornerstones of economic recovery is trust. You get trust and buy-in when there’s consultation,” Altmann remarked adding, “If everything works out from a Namra perspective we can widen the net, and be more efficient with the people from whom tax is due.”
He cautioned, however, that there must be more diligence, and called for turnaround times for VAT refunds to be minimised.
“That money can be turned back into the market and stimulate the economy,” he said.
The experts also expressed concern about public debt and the deficit, estimated at about 9.7 percent of GDP which is lower than the budgeted deficit of 12,5 percent due to better year-to-date outturn on GDP and revenue. They agree that revenue collection should be widened and improved.
Total debt is estimated at 68.8 percent, moderately lower than the budget.
Debt servicing is estimated at N$7.7 billion or 14 percent of revenue, reflecting the hitherto elevated cost of borrowing; and contingency liabilities are estimated at 7,3 percent of GDP in relation to the 10 percent threshold.
In this budget N$8.5 billion is earmarked for interest payments, which is 16,3 percent of revenue.
The panel was facilitated by Bruce Hansen, the managing director of Simonis Storm Securities.