Windhoek: I rise today to table before this august house the 2012/13 Appropriation Bill and the 2012/13 to2014/15 Medium-term Expenditure Framework (MTEF). I rise to present the budget which allows Government to stay on course in terms of poverty reduction, enhanced domestic economic development, improved service delivery and accelerated job creation. This budget has been formulated and it will be implemented amidst exceptionally uncertain global financial and economic challenges.
The budget recognizes the potential negative impact of the global economic environment on the domestic economy and the fiscus. Simultaneously, the budget recognizes inherent structural challenges and urgent national priorities in our economy for which fiscal policy has a prominent role to play.
During the previous and current MTEF, we have significantly expanded the budget, thanks to our strong pre-2008 fiscal position. The expansion was aimed at cushioning the domestic economy from the severe impact of the global economic downturn and addressing the structural challenges in the economy with added impetus.
The expansionary fiscal policy we pursued since 2008/09 has served our country well. We have shielded the economy from the severe effects of the global economic meltdown. After a mild recession of 0.4 percent in 2009, the economy rebounded in 2010 with a relatively high growth rate of 6.6 percent.
In terms of fiscal parameters, the expansion was not costless. The budget deficit has reached an estimated 11.2 percent of Gross Domestic Product (GDP) in 2011/12 and Central Government debt has increased from 16.6 percent in 2010/11 to an estimated 27.0 percent in 2011/12. This progression has placed us on the upper limits of our fiscal benchmarks.
When His Excellency, President Hifikepunye Pohamba addressed this house last year on the State of the Nation, he said and I quote: "Our country faces many socio-economic challenges that must be addressed urgently. These include unemployment, poverty, socio-economic inequalities, labour skills shortages and a narrow industrial base." These challenges still remain and the budget before you is a continuation of our targeted approach to overcome them.
This is a cautious, but targeted budget. It maintains the fiscal expansion envisaged in the 2011/12 to 2013/14 MTEF, amidst an extraordinary challenging global economic environment. The budget summons our collective responsibility to eliminate waste, to be targeted and timely with programme implementation and to do more with less.
There are four core areas for fiscal policy during the Medium-term Expenditure Framework (MTEF).
First, we have to continue entrenching macroeconomic stability by ensuring that our fiscal operations remain on a sustainable path. In this regard, the MTEF encapsulates fiscal restraint, which maintains expenditure commitments in real terms, but guards against significant expenditure expansion. Our goal to maintain fiscal prudence will be supported by renewed efforts to strengthen domestic revenue collection and administration.
Second, this budget is unrelenting in its resource allocation to priority economic and infrastructure sectors, with the objective of placing the economy on a high and inclusive growth trajectory. We have to depart from the episode of jobless growth. By any measure, unemployment and poverty levels remain unacceptably high. This budget carries forth the resource commitments and prioritization engendered in the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG). The budget provides for significant public investment in key economic and services infrastructure in order to address supply-side constraints and create robust conditions for private sector-led growth and job creation in the long-term.
This is not to discount the progress we have made and the successes we have achieved since 1990. We have maintained macroeconomic stability, fiscal prudence and external financial viability, which have become innate attributes of the SWAPO PARTY-led Government. This is serving us well and drew recognition from the world’s financial markets. We have also managed to provide fiscal support to the economy at the height of the global economic meltdown.
In this budget, we are making a timely and collective decision for a gradual withdrawal of significant fiscal expansion, in order to regain fiscal space and to be able to deal with future exogenous shocks on our economy.
The priority must be to create productive jobs in the private sector and to progressively reorient TIPEEG towards supporting job creation in the long-term. We should also accelerate growth from the current rates of 4 percent annually, if we are to reach a high-income and industrialized status by 2030. Hence the continuation of the targeted interventions under the TIPEEG dispensation in the medium-term.
Third, the 2012/13 budget summons the venerable duty of individual Offices, Ministries and Agencies (O/M/As) to reduce wastage and to waste neither time nor energy to implement programmes and to realize internal efficiency and value for money. This is what priority allocation and operational efficiency are all about. The core message emanating from the first year of TIPEEG implementation is that more money per se does not guarantee success. We have to inculcate the culture of innovation and efficient service delivery.
Fourth, the budget deploys resources to strategic infrastructure development projects to facilitate regional trade and expand our domestic production frontiers.
This Budget proposes policy actions aimed at accelerating inclusive economic growth, job creation and efficient service delivery. Unfortunately, we are facing adverse external conditions, but we can meet our goals if we make a virtue out of necessity.
I do not propose that we engage in collective pessimism. We should resolutely address the challenges we face. However, one thing is clear. Government is determined not to replicate the debt crisis that emerged in other parts of the world, where excessive and unaffordable debt has brought recession and worsened unemployment. Instead, we will rein in significant expenditure expansion, stabilize growth in public debt and strive for public spending that will support high economic growth and increased employment, while maintaining macroeconomic stability.
This is what this Budget will offer. It proposes programmes and reflects polices that will incite all of us to do more with less.
Let me unveil the medium-term fiscal objectives up front. In the coming MTEF , Government will provide policy and programme support for:-
* macroeconomic stability and external financial viability to be maintained;
* maintaining prioritization of resource allocation to economic sectors with high growth and job creation potential under the TIPEEG dispensation.
* promoting a conducive environment for our entrepreneurs to innovate, invest, employ and export more;
* empowering our youth to acquire new and up-to-date skills in schools, vocational training institutions and at the workplace;
* strengthening the capacity for our country to become self-sufficient in power supply;
* encouraging Government institutions to become more innovative and more efficient in programme execution and service delivery
* enhancing public expenditure programmes to produce better results;
* encouraging our labour unions and public servants to exercise restraint in wage negotiations;
* encouraging our people and enterprises to contribute more revenue to Government;
* contributing to the development of strategic infrastructure, such as turning the Greater Walvis Bay Area into a Regional Hub for clustered investment in logistics support, shipping, industrialization and service delivery to Western, Central and Southern Africa Regions
* providing the resources for Government to mitigate the impact of, and our people to adapt to climate change, and
* Ensuring deeper regional economic integration and improve Namibian merchandize export capacity.
Allow me to give an account of developments for the fiscal year that is now almost behind us. Then, I will proceed to summarize policies and programmes that Government proposes to carry out in this Budget and through the 2012/13 to 2014/15 MTEF period.
Comments on regional integration
29. The size of the domestic market makes it imperative that Namibia continues its outward-trade policy to facilitate diversification of export commodities destinations, while enhancing value addition. This includes finding ways to promote Namibia’s increased trade with SADC and SACU markets as well as establishing new markets in emerging economies.
30. It is against this background that Government is participating pro-actively in the process of formulating a regional Industrial Development Policy for SACU. In addition, the implementation of the SADC Finance and Investment Protocol will lead to a more conducive investment environment and transparent processes that can help in promoting intra-SADC trade and investment.
31. The SACU industrial policy will allow the BLNS countries to develop their supply-side abilities to improve their range of export commodities.
32. Government is also taking part in the Tripartite Free Trade Area negotiations that were launched in December 2011 for the envisaged Free Trade Area among SADC, East African Community and COMESA. The aim is to conclude these negotiations by 2014.
33. Government also welcomes the decision taken in January 2012 by the African Union Summit to move towards the establishment of an "All AU Free Trade Area" by 2017.
- Readers can access the Budget Speech and supporting documentation here.