Minister of Finance, Hon. Iipumbu Shiimi
Minister of Finance Hon. Ipumbu Shiimi tabled the 2021/22 Appropriation today (17/03/2021) in the National Assembly, a second since his maiden introduction, and a seventh under the administration of His Excellency President Dr Hage Geingob.
The anticipated budget is presented under the theme “Boosting Resilience and Recovery” The budget is presented under the theme “Boosting Resilience and Recovery”. This theme is in resonance with the clarion call and the declaration by His Excellency the President for the year 2021 as the ‘Year of Resilience’, further summoning stakeholders resolve to insulate the capacity of the economy and the socioeconomic structure, while supporting economic recovery from the fractures impacted by the pandemic.
The budget looks at the Estimates of Revenue and Expenditure for the 2021/22 financial year; and the 2021/22 – 2023/24 Medium Expenditure Framework.
Equally, the Minister of Finance presented the Fiscal Strategy and the Development Budget for the Medium Term Expenditure Framework (MTEF) as well as the Government Accountability Report for the 2019/20 financial year as key budget policy and public accountability documents.
In his statement, Shiimi also highlighted that the budget as an instrument of fiscal policy has taken into consideration the input provided by the various stakeholders; comprising, among others; the youth, the business community, organized labour, professional bodies, Chief Whips of the various political parties, civil society and Regional Authorities.
“This budget is presented amidst the prospects of a moderate economic recovery this year and over the medium term, buttressing our hope for a better future for all Namibians, this is after having endured latitude of pain and hardship over recent years of recessionary pressures and the pandemic-induced severe disruption of the economy,” noted Shiimi.
In May last year, and amidst the onset of COVID-19, the Minister of Finance tabled the FY2020/21 Budget under the theme, “Together fighting COVID-19, Together thriving again”. Almost a year later, the Minister acknowledged that the country bear testimony that the fight has not been easy, but it is being gloriously prosecuted on all fronts.
“Our united front to defeat COVID-19 and continue on our journey towards shared prosperity must now propel us to acquire and roll-out the vaccine countrywide and achieve herd immunity. This is a necessary imperative for greater opening up of the economy,” said Shiimi
With public debt estimated at 76.2 percent of GDP over the coming financial year, ensuring the sustainability of the country’s public finance is one of the highest policy priorities. This budget strikes a balance between boosting the country’s resilience in the core dimensions of sustainable growth and anchoring the fiscal operations in a sustainable macro-fiscal framework.
In respect of the 2020/21 financial year, the Minister stated that the total revenue is estimated at N$55.5 billion, 7.9 percent better than the budget and half a percentage point better than the Mid-Year Review estimate. This, Shiimi says reflects better than forecast outturn on various domestic tax revenue streams, standing at 98 percent as at the end of February 2021.
The preliminary expenditure outturn, including expenditure commitments by the end of February 2021 stood at N$65.2 billion and it is anticipated to approximate the N$72.1 billion appropriation, taking into account the unintended consequences of the lockdown measures on capital project related expenditure.
The Finance Minister further stated that this comprises of 91.3 percent operational expenditure execution rate and 82.2 percent development budget spending rate, in addition, the budget deficit is estimated at about 9.7 percent of GDP, lower than the budgeted deficit of 12.5 percent due to better year-to-date outturn on GDP and revenue. Total debt is estimated at 68.8 percent, moderately lower than the budget and debt servicing is estimated at N$7.7 billion or 14.0 percent of revenue, reflecting the hitherto elevated cost of borrowing, while contingency liabilities are estimated at 7.3 percent of GDP in relation to the 10 percent threshold.
The Minister highlighted that N$67.9 billion budget for the 2021/22 financial year. Budget revenue is projected to decline by 6.1 percent to N$52.1 billion, from the estimated N$55.5 billion in 2020/21. This is largely due to the expected contraction in SACU receipts. Over the remainder of the MTEF, revenue is forecast to gather pace at an average rate of 4.8 percent as domestic economic activity and regional trade pick up.
The proposed expenditure equates to 36.8 percent of GDP and 5.8 percent lower than the N$72.1 billion budget for 2020/21, netting off the special considerations of the past year and underscoring the urgency for a growth-friendly fiscal consolidation over the medium term.
Shiimi announced that the following “sin” taxes have come into force since mid-night of 24 February 2021, consistent with the SACU Agreement:
A 340ml can of beer or cider now costs an extra , 750ml bottle of wine costs an extra 26c , 750ml bottle of sparkling wine attracts an extra 86c while a bottle of 750 ml spirits, including whisky, gin or vodka, has increased by N$5.50c 16 . A packet of 20 cigarettes costs an extra N$1.39c and 25 grams of piped tobacco now costs 47c more, and a 23 gram cigar is now N$7.71c more expensive.
This brings the details of the 2021/22 Appropriation Bill. The total proposed expenditure outlay amounts to N$67.9 billion. Out of this aggregate expenditure, N$8.5 billion is earmarked for interest payments and this, the Minister said it is deemed appropriated. This is 16.3 percent of revenue. Thus, the 2021/22 Appropriation Bill amounts to N$59.4 billion, for which N$53.9 billion is operational and N$5.6 billion is development.
The Public Safety Sector takes up the second highest allocation, amounting to N$12.1 billion or 20.3 percent of the total allocation, supporting the maintenance of law and order and continued investment in peace and stability. Among others: The Ministry of Home Affairs, Safety and Security is allocated N$5.7 billion, which is 9.6 percent of the total allocation, Defense and Veteran Affairs is allocated N$5.4 billion, about 9.1 percent of the total allocation and a reduction of N$800 million or 12.8 percent from the current fiscal year to compensate for health defense during these unusual times. The Ministry of Justice is allocated N$491.4 million, while the Judiciary receives N$371.2 million, and, the Anti-Corruption Commission is allocated N$62.8 million to enable the Commission to perform its functions optimally. This allocation takes into account the N$11 million recently made available to the Commission from the Contingency Fund to further support its operations.
The third highest allocation is accorded to the Economic and Infrastructure sectors, at N$11.7 billion or 19.8 percent of the total appropriation. The Administrative Sector receives the least allocation of N$4.0 billion, equivalent to 6.8 percent of the total allocation. International Relations and Cooperation is allocated N$ 827.7 million, and National Assembly is allocated N$117.2 million, while the National Council is allocated N$88.4 million.