Budget will tighten belts
The finance minister Calle Schlettwein has indicated that the budget for the next financial year will continue to reflect cost-cutting measures.
Despite the prospect of improved growth in 2018, finance minister Calle Schlettwein says budget cuts will continue in the national budget expected to be tabled later this month or in the first week of March.
He was speaking at a pre-budget discussion last week Friday. According to Schlettwein, although last year's budget cuts affected the economy, it was the right thing to do at the time. “We believe 2018 will not be a year where we can be generous; fiscal consolidation must be carried through. We admit that fiscal consolidation had a negative impact on growth and employment,” said Schlettwein.
The minister gave his assurance that the cuts in the new budget would not be as deep as was the case with the first consolidation.
“We are very positive [that] fiscal consolidation was the right step. From the 2015/16 financial year, our debt-to-GDP ratio is in decline, the deficit is declining, which is on flat growth,” he said.
He warned that Namibia's economy would not immediately recover.
“We will not be out of the woods in one year,” he said.
The fiscal consolidation programme was also a learning experience, he said.
“Too sharp of a consolidation is an action that has very serious impacts. “Unpaid invoices accumulated and this forced the private sector to take up debt instead of investing. Do we stall consolidation and expand the budget? Then we will be back to square one. We learned that consolidation is better if it is milder,” he said.
Without giving too much away, Schlettwein said the new budget would continue along the fiscal consolidation route.
“There are no big bangs, the principal policy drive will be the same to address poverty and stimulate growth,” Schlettwein said.
A finance ministry official has told Namibian Sun that 28 February had been identified as a suitable date for tabling the budget, but that discussions with the Speaker of the National Assembly were continuing.
OGONE TLHAGE
He was speaking at a pre-budget discussion last week Friday. According to Schlettwein, although last year's budget cuts affected the economy, it was the right thing to do at the time. “We believe 2018 will not be a year where we can be generous; fiscal consolidation must be carried through. We admit that fiscal consolidation had a negative impact on growth and employment,” said Schlettwein.
The minister gave his assurance that the cuts in the new budget would not be as deep as was the case with the first consolidation.
“We are very positive [that] fiscal consolidation was the right step. From the 2015/16 financial year, our debt-to-GDP ratio is in decline, the deficit is declining, which is on flat growth,” he said.
He warned that Namibia's economy would not immediately recover.
“We will not be out of the woods in one year,” he said.
The fiscal consolidation programme was also a learning experience, he said.
“Too sharp of a consolidation is an action that has very serious impacts. “Unpaid invoices accumulated and this forced the private sector to take up debt instead of investing. Do we stall consolidation and expand the budget? Then we will be back to square one. We learned that consolidation is better if it is milder,” he said.
Without giving too much away, Schlettwein said the new budget would continue along the fiscal consolidation route.
“There are no big bangs, the principal policy drive will be the same to address poverty and stimulate growth,” Schlettwein said.
A finance ministry official has told Namibian Sun that 28 February had been identified as a suitable date for tabling the budget, but that discussions with the Speaker of the National Assembly were continuing.
OGONE TLHAGE
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