Billions wiped from national budget
The finance ministry is anticipating revenue losses of up to N$10 billion as a result of the coronavirus pandemic, which will massively impact government spending on infrastructure projects.
11 May 2020 | Ministries
The ministry of finance is expecting a 10 to 12% loss in taxes collected as the coronavirus pandemic further obliterates the economy. Between N$7 billion and N$10 billion is expected to be wiped off the national budget. This is according to the technical advisor in the finance ministry, Penda Ithindi, who said government would, going forward, have to plan its finances meticulously during and in the aftermath of the pandemic. The National Planning Commission (NPC) last week said the economy had lost one-third of its output as a consequence of the countrywide lockdown.
Economy closed off
Namibia had been on lockdown since 28 March, closing off sectors of the economy except for those providing essential services.
“We have anticipated that revenue will possibly go down in the magnitude of 10% or 12% or so based on what we see at the moment. If this continues, if we see the picture changing for the worse in the health sector [rising coronavirus infections], then that will have implications on the economy,” Ithindi said.
“We have done that assessment and that, of course, will impact on spending, on expenditure,” he added.
The pandemic has also meant that government has not been able to table its national budget, even though it finds itself in a new financial year.
According to Ithindi, the budget is anticipated to be tabled later this month, as policymakers have to take into account the scale of the pandemic on the economy.
Namibia's 2019/20 national budget, as approved, stood at N$66.5 billion, against an expected inflow of N$58.3 billion.
“We anticipate that the budget will still be tabled this month, all things being equal, in the middle of the month or so, and the budget will take into consideration the effect on the economy, that you have a contraction in the economy.
“You have certain sectors that are hit and that has a direct impact on national revenue, and therefore we anticipate that expenditure will be relooked.
“Really, the key there is to say that government would ensure that essential services continue.”
Infrastructure projects in jeopardy
During and after the pandemic, Ithindi said it would be business unusual for government regarding its spending priorities.
According to him, government would for now put on hold spending on new infrastructure projects and would instead allocate resources towards fighting the pandemic.
“We cannot only be caught up in short-term thinking around Covid-19, without ensuring that the economy has the potential to rebound. We have then to compromise to accommodate some of our ambitions we had of certain development programmes.
“We may have to do away with starting to build a new road, and instead put the money in critical sectors, so we are rebalancing,” he said.