At the end of the day, a budget is only words on paper. One cannot spend a budget. Government has once again laid out what it wishes to spend in a fiscal year vs what it hopes will be income in that same year. In saying this, we do not in any way denigrate the hard work of Finance Minister Ipumbu Shiimi’s team. That man should be nominated for the war medal given to soldiers who take wounds in service of their country. He stood calmly before the august house and laid out the largest deficit budget a free Namibia has ever seen.
We are simple souls. But, even we see that 51.4 (income) – 72.8 (bills to be paid) = -21.4.
And it could be worse. As of now, the nation can only HOPE that the income for fiscal 20/21 is N$51.4. With all due respect, look at what just happened in Walvis Bay. One man coming ashore with the active virus bumped that town back to Stage 1 of the State of Emergency regulations. They are locked down. God help us all if more truckers bunk from their inhuman quarantine conditions or more landed travelers get loose across the borders (as has already happened) from Angola and into our newly opened markets and restaurants. Lockdowns kill revenues.
We can only HOPE about the level of SADC revenues – this figure has been wrongly estimated before. We can only HOPE about tax revenues. We are hoping the decrease in revenues will only be 20 percent (which is frightening). It could well be much worse as more taxpayers lose their jobs or endure salary cuts in unexpected ripple effects on a shrinking economy.
No tourists mean less foreign exchange flows, less buying for an entire industry that cross-cuts sectors, less PAYE as employees are retrenched, less payment to the airports company, less border crossing, and park entry fees, and fewer seats bought on the national airline. And, it will mean more poaching as wildlife that cannot generate tourism income, will become meat on the table.
World markets for our main exports are another huge income hope with the pandemic raging in the countries that buy our products.
As for our debts, we must again applaud Minister Shiimi’s stoic ability to make his speech without breaking down in shivers. If 68.7 percent of our personal income was owed in debt payments before we even earned it – we’d be in tears. And yet, the minister took it on the chin and announced that Namibia owes 68.7 percent of our annual GDP as government debt.
The harsh truth is that the Finance ministry cannot start handing out money on the basis of a budget speech. Ministries would be foolish to start spending because of an announced allocation. They can only spend what is in the bank. The problem starts with receiving a ‘budget’ at the end of MAY for a fiscal year that started two months ago, based on money that will not be deposited for perhaps four or five more months. Ministries are being asked to deliver state services on wishes and hopes.
The 800-pound gorilla in the room is named “-21.4 percent.” It has been announced that the country will borrow to cover it. Who will lend it to us and at what high rate? Who must pay that back – our grandchildren? Will it be paid along with the Eurobond payment due in October 2021?
When there is a deficit, you have to either earn more or cut, or both. We are supposed to be doing both. But are we serious about doing reductions?
Cutting a budget is not the same as trimming it or ‘making do with less’. The cuts that will reduce government debt are the biggest sacred cows in the kraal.
Where is the cut of the civil servant payroll by a third? Where is the cut for high officials’ salaries by 25 percent? It is utterly absurd to have a Windhoek Mayor and Police Chief, earning a combined N$550,000 per month.
Cut parliament in half. End private ‘quotas’ for fishing, hunting, or mining and return that revenue to Treasury. Privatize loss-making commercial SOEs. Eliminate the post of Vice President, Deputy Prime Minister and certain Deputy Ministers. Send the tax storm troopers North and collect money from businesses there. Tax beef new exports from above the red line (stop talking about it for 30 years – do it) and sold to neighbouring countries.
Sell or rent any under-utilized government houses/property. If no rent is being paid by occupants, evict them.
Close down selected embassies and missions.
Cut the allocation for the Ministry of Defence. Their budget is only the smallest bit lower than last year (N$5.5 billion now against N$5.4 million then). Did we miss the raging war that Namibia is fighting in? Or will more hunting lodges be purchased?
Shiimi will have to find the chutzpah to take on these kinds of tough, unpleasant, undesirable, politically-charged cuts. The point is that every cut made must measurably drop the national debt. Of course, the Finance minister will be fired if he advocates to cut sacred cows, but taking one for the team is a requirement of high office during a national emergency.
A budget of hopes and wishes is not the way out of this problem. We need tangible adjustments..
