Calle’s budget tightrope act

Finance Minister Calle Schlettwein is expected to announce a budget that will dramatically exceed N$60 billion – driven skyward by the government’s bloated ministries and increases in social grants like pensions. However, the elderly should not expect a dramatic pension hike. Economist Omu Kakujaha-Matundu said today’s budget would definitely be an “expansionary” one. “I suspect it is going to be bigger than last year’s N$60 billion budget,” he said. “In this case the budget drivers will be the creation of new ministries, which is going to increase the government wage bill. This is because of the top-heavy administration. The emphasis on (Geingob) being pro-poor could lead to some new social grants, which could be in the form of the basic income grant (BIG).” He said the Poverty Eradication Ministry is expected to come up with new social grants, and those will be biggest drivers of the new budget. “I am not in favour of an increase in the old-age pension, while you have the Ministry of Poverty Eradication, because the other social grants will be able to take care of the needs of family members.” He said government can also look at introducing wealth taxes and or taxes on luxuries. Professor Nico Horn said the new President, Hage Geingob, would not have had much input into today’s budget, as it stems from former President Hifikepunye Pohamba’s time in office, which ended on March 21. “I do not expect big changes. I would be surprised if a lot of money is allocated to poverty eradication. It is always possible that Geingob could have moved some money around. If we are going to see some money being allocated to poverty eradication, we must also mind that the structures are also not in place yet,” Horn said. “What we might see is maybe a little more money allocated to social services and to the ordinary things like the mass housing project perhaps. These projects are ongoing.” He said it may have been possible for the President and his Cabinet staff to get involved in the drawing up of the budget, “but you can’t expect much, because there was not enough time for them to make a meaningful influence”. Horn said the budget will be heavily influenced by the Namibia dollar, which is still linked to the South African rand. “We cannot escape the problems in South Africa, although we are not affected yet, we are starting to feel the pinch. We are not going to have a nice budget, but a very tight budget. There has been strong pressure to push the old age pension to N$1 500, but the best we can expect is N$900 or N$1 000, but nothing more.” He added that higher or new taxes would discourage job creation. “This should be the last resort,” Horn said. He said the Fourth National Development Plan was a baby of the previous government and Geingob would want to finalise it, so that he can start with his own visions and goals. WINDHOEK ELVIS MURARANGANDA