Namibian Finance Minister Saara Kuugongelwa-Amadhila on Thursday afternoon (15/3/07) tabled the 2007/2008 budget in the National Assembly. One of the highlights is that for the second year running, the budget shows a surplus, this time of 2.1%.
In a media release on Thursday evening, Old Mutual Namibia welcomed the budget tabled by the Minister of Finance and the Manging Director, Johannes !Gawaxab said he hopes that the budget surplus of 2.1% will contribute to national savings efforts, mitigate concerns for current account challenges and act as a buffer for unforeseen shocks to the economy.

“We trust that the surplus will be utilized to support productive sectors for economic growth and that the surplus will not be used to fund recurring expenses such as salaries, that it is not indicative of a contraction in government spending and that it does not compromise development spending over the long-term,” commented !Gawaxab.

!Gawaxab however raised the concern that economic growth over the past three years has not been sufficient to alleviate the burden of poverty and unemployment in Namibia.
He commended the allocations of N$11.7 billion and N$5.5 billion to education and health respectively. However, it remains to be seen whether the allocations improve educational outputs such as national pass rates and remuneration for teachers. The education system has failed thus far with minimal output in terms of skills development in the long run. As far as health care is concerned, it remains to be seen whether the allocation to health will indeed improve the quality of life for Namibians.

!Gawaxab welcomed the increase in the tax threshold from N$24,000 to N$36,000, as well as the increase in the allowable deductions in terms of pension fund contributions from N$30,000 to N$40,000 per annum, stating that it will hopefully be directed to savings as opposed to consumption. The withholding of 10% tax on interest income was a disappointment as was the proposed amendment to the Transfer Duty Act, which will require the payment of transfer duty upon the transfer of member’s interests in a Close Corporation.

He also specifically welcomed the amendment to Regulation 28 of the Pension Funds Act and Regulation 15 of the Long-term Insurance Act, which will compel pension funds and long-term insurers to invest a minimum of 5% in Namibian unlisted entities. “We trust that appropriate governance measures will be put in place and that the funds will be allocated to credible institutions,” said! Gawaxab.

Tabling a budget that promises to create conditions necessary for poverty reduction and job creation, Kuugongelwa-Amadhila announced the increases excise duty tariffs on alcoholic drinks and cigarettes in the National Assembly during the tabling of the 2007/2008 national budget.

Excise duties for all ciders and alcoholic fruit beverages except traditional brews have gone up by eight per cent.

Also affected are unfortified and fortified wines and sparkling wines, which went up by 8.5 per cent, 10 per cent and 10 per cent respectively.

Excise duty on imported alcoholic spirits such as whisky, gin and liqueurs were increased by 10.5 per cent.

Excise duties on Cigarettes, Cigarette tobacco, Pipe tobacco and Cigars increased by 10.71 per cent, 5.32 per cent, 5.76 per cent and 10.46 per cent respectively.
The increases are to benefit the SACU Revenue pool and will be shared out to Member States in accordance with an agreed Revenue Sharing Formula.

Along with the 2007/08 Budget, Kuugongelwa-Amadhila also tabled the Medium-Term Expenditure Framework (otherwise known as the three-year rolling budget) for the financial years 2007/08 to 2009/10.

As widely expected, the budget gives high priority to education, health and social welfare, debt management, improved revenue collection, infrastructure development and poverty reduction.

Perhaps the most significant pro-poor policy intervention introduced for this Medium-Term Expenditure Framework (MTEF) is the lifting of the threshold for taxable income from N$ 24,000 to N$ 36,000 in an effort to relieve the tax burden of low income earners.

Kuugongelwa-Amadhila explained that this means that individuals earning below N$ 36,000 will be exempted from paying income tax as from 2007/08 onwards.
'This will increase the take-home part of any salary earner and with that, the buying power of especially those in the lowest income brackets,' she said.
News of this policy alteration was welcomed with much applause in the National Assembly on Thursday.

The deduction allowable for retirement contributions has also been increased from the current N$ 30,000 per annum to N$ 40,000 to improve the ability of employees to cater adequately for the pension needs and also provide an incentive towards increased savings.

The country's Development Budget, which is meant to implement major infrastructure development projects, has been increased by N$ 800 million under the METF and Nampower would receive an allocation of N$ 1 billion over the next three years to deal with the country's desperate power needs.

The Finance Minister said total revenue and grants for the MTEF is estimated to reach a total amount of N$ 51.8 billion, with N$ 47.9 billion coming from tax revenue, N$ 3.4 billion from non-tax revenue, N$ 72.5 million coming from return on equity a further N$ 488,9 million representing grants.

Total expenditure for the MTEF is projected at N$ 52.5 billion with the larger chunk of that money (N$ 43.1 billion going towards operational expenditure.

The breakdown of total expenditure per financial year is as follows: N$ 17.8 billion in 2007/08; N$ 17.1 billion for 2008/09 and N$ 17.5 billion for 2009/10.

From the funds appropriated for the MTEF, the Ministry of Education and the Ministry of Health and Social Services took the lion's share of the budget resources, scooping N$ 11.7 billion and N$ 5.5 billion respectively.

For this particular financial year, however, the Ministry of Education will get N$ 3,669,517,000.

The Ministries of Mines and Energy, Trade and Industry, Fisheries, Agriculture and Tourism will receive a total amount of N$ 4 billion under the MTEF to boost economic growth and job creation while transport infrastructure gets N$ 1.8 billion over the MTEF period to use in the development of national roads and rail networks.

Kuugongelwa-Amadhila said additional loan funding is being negotiated to close existing funding gaps that would raise total funding to this sector significantly.

The Namibian Police also, will receive an additional N$ 3.1 billion to improve law enforcement and combat crime while the Ministry of Justice and Attorney-General is set to get N$ 685 million during the MTEF period to reduce the backlog in court cases.
DTA MP Johan De Waal, who heads the Parliamentary Standing Committee on Public Accounts said the budget was much welcome and indeed pro-poor and pro-growth.
'This is a very neutral budget. It did not come up with surprises or anything strange,' said De Waal.

The amount appropriated for government ministries and institutions for this financial year totals N$ 16 625 642 000, representing an increase of over N$ 1.5 billion from last year's budget.

Following is a breakdown of all the allocations per Ministry with last year's allocation in brackets:

• Office of the President: N$ 227 795 000 (N$ 244 539 000)
• Office of the Prime Minister: N$ 110 743 000 (N$ 74 742 000)
• National Assembly: N$ 68 425 000 (N$ 62 955 000)
• Office of the Auditor-General: N$ 26 015 000 (N$ 23 028 000)
• Ministry of Home Affairs and Immigration: N$ 119 057 000 (N$ 95 113 000)
• The Namibian Police: N$ 976 466 000 (N$ 837 246 000)
• Ministry of Foreign Affairs: N$ 272 843 000 (N$ 243 074 000)
• Ministry of Defence: N$ 1 682 842 000 (N$ 1 381 867 000)
• Ministry of Finance: N$ 2 744 374 000 (N$ 1 769 981 000)
• Ministry of Education: N$ 3 699 517 000 (N$ 3 257 221 000)
• National Council: N$ 31 627 000 (N$ 30 256 000)
• Ministry of Gender Equality and Child Welfare: N$ 191 333 000 (N$ 151 976 000)
• Ministry of Health and Social Services: N$ 1 682 916 000 (N$ 1 395 991 000)
• Ministry of Labour and Social Welfare: N$ 787 276 000 (N$ 708 670 000)
• Ministry of Mines and Energy: N$ 96 439 000 (N$ 139 942 000)
• Ministry of Justice: N$ 246 071 000 (N$ 202 209 000)
• Ministry of Regional and Local Government, Housing and Rural Development: N$ 518 285 000 (N$ 459 541 000)
• Ministry of Environment and Tourism: N$ 299 917 000 (N$ 151 149 000)
• Ministry of Trade and Industry: N$ 126 462 000 (N$ 107 993 000)
• Ministry of Agriculture, Water and Forestry: N$ 625 766 000 (N$ 640 446 000)
• Prisons and Correctional Services: N$ 212 205 000 (N$ 201 184 000)
• Ministry of Fisheries and Marine Resources: N$ 163 705 000 (N$ 133 031 000)
• Ministry of Works, Transport and Communication
• a) Works: N$ 357 471 000 (N$ 311 051 000)
• b) Transport and Communication: N$ 713 220 000 (N$ 645 140 000)
• Ministry of Lands and Resettlement: N$ 140 045 000 (N$ 125 665 000)
• The National Planning Commission: N$ 50 429 000 (N$ 53 272 000)
• Ministry of Youth, National Service, Sport and Culture: N$ 205 869 000 (N$ 189 909 000)
• Electoral Commission of Namibia: N$ 25 709 000 (N$ 9 867 000)
• Ministry of Information and Broadcasting: N$ 154 204 000 (N$ 158 156 000)
• Anti-Corruption Commission: N$ 11 258 000 (N$ 6 579 000)
• Ministry of Veteran Affairs: N$ 22 986 000 (new ministry)