Budget: Will Shiimi grant Hage’s old-age pension wish?

Economists say government will have to decide whether it will increase social safety nets or prioritise infrastructure spending as the nation waits with bated breath for the tabling of the national budget today.

Late president Hage Geingob, during his New Year’s message, expressed a desire to see monthly social grants for pensioners increased significantly.

“Before I leave office, I hope the old-age pension grant will be increased to N$2 000, or even N$3 000.”

“It is very tough, we need to make a decision whether we invest in consumption or in the future. Upping social grants without the additional revenue sources will mean we have to cut on capital projects, or we will need to increase borrowing,” independent economist Klaus Schade said.

Government would have to carefully calculate how it plans to execute the budget, he added.

“We will need to do more calculations, and find a compromise. We will need to find a balance between consumption and investment.”

Some freedom

Government is expected to get some fiscal freedom on the back of increased receipts from the Southern African Customs Union (SACU) revenue pool, Schade said.

“Payments to SACU will increase by N$10 billion, which should result in N$3.4 billion for Namibia, although our budgeted figure was less for SACU, so there may be positive adjustments.”

The probable lifting of tax thresholds could also help free up some disposable income, he added.

“[Finance minister Ipumbu Shiimi] announced that he will increase the tax threshold to N$100 000, and that will have an impact on tax revenue, but it can have a positive impact on Value Added Tax spending as additional [disposable] income may be spent,” Schade said.

Critical

According to academic Omu Matundu-Kakujaha, the increase of pension grants is a far-fetched idea at the moment.

“Any suggestion for such increases is plausible, but not feasible. Fiscus has very limited fiscal space. Given competing priorities such as the national elections, such increases are unlikely. However, a small increase by the usual $100 will at least take care of inflation,” he said.

Economic Association of Namibia CEO Cons Karamata said government is expected to follow an expansionary fiscal path in light of it being an election year.

“We are expecting an expansionary budget since this is an election year. It is critical, however, that the increased spending is directed towards areas of high potential for stimulating economic growth and job creation.”