Expenditure forecasts ‘unrealistic’-analysts
Local analysts say expenditure forecasts for the outer Medium-Term Expenditure Framework (MTEF) years are ‘unrealistic and over ambitious’.
Finance minister Ipumbu Shiimi during the mid-term budget review announced an increase in expenditure by N$4 billion.
The operational budget increased to N$60.1 billion, compared to N$56.6 billion initially budgeted in February to 60.1 billion. It incorporates civil servants salary increment, which will cost the government N$1.3 billion.
The development budget was revised upwards from N$5 billion to N$5.5 billion.
Shiimi also announced that N$5.2 million has been included in the budget of the ministry of gender equality, poverty eradication and social welfare to increase the monthly Conditional Income Grant (CIG) for former foodbank recipients from N$500 to N$600 effective in October 2022.
In addition, funding of N$97 million has been incorporated to increase the disability grant for beneficiaries under the age of 18 from N$250 to N$1300 effective from FY2023/24.
Further provision has been made to increase the monthly old age grant and the disability grant as well as the orphan and vulnerable children grant by N$100 effective in FY2023/24, should resources permit, Shiimi said.
An allocation has been made for the National Census to be undertaken in FY2023/24.
Moreover, provisions have been made for the upcoming presidential, national assembly as well as regional and local authorities elections to be held in 2024.
According to Cirrus Capital, “we believe the expenditure forecasts for the outer years are overly ambitious – but for materially different reasons. Expenditure is projected to remain relatively flat from FY ‘23/24 onwards. We have seen this sort of commitment to expenditure restraint in the past – a task much easier to commit to for the future, and then break the pact nearer to the time because circumstances require so. Quite frankly, this forecasting appears unrealistic.”
IJG noted that revenue and expenditure estimates for the outer MTEF years indicate that this is likely to be a trend going forward. The majority of the increase in expenditure has been allocated to the social sectors, with a large portion thereof allocated to salary increases.
No mention is made of rightsizing the development budget. This is a sign of the pressure that has built up during the fiscal consolidation years. Budget ceilings were contained but undoubtedly weighed on the various ministries’ ability to achieve their respective goal, IJG said.
Lastly, Simonis Storm said “on the expenditure side, it can be that we see an increase in spending given that it is closer to an election year. However, credit rating agencies will likely punish government if fiscal consolidation is not prioritized amidst improved revenue collection in 2023.”
Over the MTEF, the deficit is projected to average about 2.4% of gross domestic product (GDP). The public debt stock is expected to increase to N$138.4 billion, equivalent to 69.6% of GDP in FY2022/23.The pace of debt accumulation is projected to peak in the next financial year resulting in a stabilization of the debt ratios over the remainder of the [email protected]
Finance minister Ipumbu Shiimi during the mid-term budget review announced an increase in expenditure by N$4 billion.
The operational budget increased to N$60.1 billion, compared to N$56.6 billion initially budgeted in February to 60.1 billion. It incorporates civil servants salary increment, which will cost the government N$1.3 billion.
The development budget was revised upwards from N$5 billion to N$5.5 billion.
Shiimi also announced that N$5.2 million has been included in the budget of the ministry of gender equality, poverty eradication and social welfare to increase the monthly Conditional Income Grant (CIG) for former foodbank recipients from N$500 to N$600 effective in October 2022.
In addition, funding of N$97 million has been incorporated to increase the disability grant for beneficiaries under the age of 18 from N$250 to N$1300 effective from FY2023/24.
Further provision has been made to increase the monthly old age grant and the disability grant as well as the orphan and vulnerable children grant by N$100 effective in FY2023/24, should resources permit, Shiimi said.
An allocation has been made for the National Census to be undertaken in FY2023/24.
Moreover, provisions have been made for the upcoming presidential, national assembly as well as regional and local authorities elections to be held in 2024.
According to Cirrus Capital, “we believe the expenditure forecasts for the outer years are overly ambitious – but for materially different reasons. Expenditure is projected to remain relatively flat from FY ‘23/24 onwards. We have seen this sort of commitment to expenditure restraint in the past – a task much easier to commit to for the future, and then break the pact nearer to the time because circumstances require so. Quite frankly, this forecasting appears unrealistic.”
IJG noted that revenue and expenditure estimates for the outer MTEF years indicate that this is likely to be a trend going forward. The majority of the increase in expenditure has been allocated to the social sectors, with a large portion thereof allocated to salary increases.
No mention is made of rightsizing the development budget. This is a sign of the pressure that has built up during the fiscal consolidation years. Budget ceilings were contained but undoubtedly weighed on the various ministries’ ability to achieve their respective goal, IJG said.
Lastly, Simonis Storm said “on the expenditure side, it can be that we see an increase in spending given that it is closer to an election year. However, credit rating agencies will likely punish government if fiscal consolidation is not prioritized amidst improved revenue collection in 2023.”
Over the MTEF, the deficit is projected to average about 2.4% of gross domestic product (GDP). The public debt stock is expected to increase to N$138.4 billion, equivalent to 69.6% of GDP in FY2022/23.The pace of debt accumulation is projected to peak in the next financial year resulting in a stabilization of the debt ratios over the remainder of the [email protected]
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