Cabinet took the following decisions at the 2nd 2007 meeting of the 4th Government held on 13 February 2007:


1. MACRO ECONOMIC AND BUDGETARY FRAMEWORK FOR 2007/2008 – 2009/10 FISCAL YEARS:

Cabinet approved the following policy recommendations for the 2007/2008 budget:

• That the Government continue to promote economic growth through rural infrastructure development, SMEs promotion and the transformation of subsistence agriculture;
• That Government reviews its procurement policy to improve support to local entrepreneurial development and the empowerment of the previously disadvantaged;
• That priority targeting of budget resources and adherence to expenditure ceilings are improved;
• That budget resources be redirected from operational activities to development programmes if development programmes is to increase;
• Efforts to improve revenue collection must continue, especially in the light of the anticipated reduction in SACU receipts;
• The reform of State Owner Enterprises needs to be expedited to reduce their dependency on budget transfers and improve their efficiency. In this regard, Cabinet directed that line ministries must ensure that the remuneration of new positions of managers and staff in SOEs is pegged to that in Government;
• A clear policy on diversification and industrialisation must be developed to accelerate economic growth; and
• Barriers to investment growth need to be eliminated to improve Namibia’s competitiveness as an investment location.

The Macroeconomic and Budgetary Framework is a policy framework that advises the government on the allocation of public resources to competing socio-economic needs based on an analysis of domestic, regional and world economies.

On the world economic front, global economic growth slowed down from 5.3% in 2004 to 4.9% in 2005. The slow down was caused by volatility in oil prices, political instability in the Middle East and widespread natural disasters. Similarly, economic growth in Africa in 2005 was on average 5.4%, which is .1% lower than in 2004.

Closer at home, Namibia recorded a moderate growth rate of 4.2% in 2005, while the estimated 2006 economic growth rate is 4.6%. The increase is mainly driven by mining, transport and communication, retail and the tourism sector. Inflation, however, rose to 5.2% in 2006 from an average of 2.2% in 2005. This is mainly attributed to the increase in oil prices.

Namibia’s economy remains dependent on primary products, which made economic performance volatile. Broadening the economic base remains a Government priority to raise the long-term potential to create employment, address the skewed distribution of national income and curb the spread of the HIV/AIDS pandemic.

Since Namibia’s economic is linked to the international economy, factors such as oil prices, the exchange rate and international demand for commodities have a determinant role in the direction of the country’s economic path.

Further information can be obtained from the Ministry of Finance at telephone number 2099111.


2. MEMORANDUM OF AGREEMENT BETWEEN GOVERNMENT, NAMIBRE AND SHORT-TERM INSURANCE INDUSTRY:

Cabinet approved the memorandum of agreement and authorised the Minister of Finance to sign it on behalf of the Namibian Government. Cabinet also authorised the Minister of Finance to gazette notices in line with the memorandum of agreement, which provides that:

• Insurance companies with Namibian stand-alone reinsurance treaties shall cede to NamibRe 20% of their reinsurance treaties;
• Insurance companies without Namibia stand-alone reinsurance treaties would cede 7.5% of their net retained account; and
• NamibRe shall be offered all other treaties first before the same are place abroad, which include medical reinsurance.