No budget boost for vehicle sales
Finance minister Calle Schlettwein left his revised vehicle budget over the medium-term expenditure framework unchanged from the one in the main budget tabled in March this year.
31 October 2018 | Economics
The mid-year budget review tabled by finance minister Calle Schlettwein last week shows government spent nearly N$22.2 million on vehicles in 2017/18 compared to a revised budget of about N$29.4 million.
As part of government’s severe fiscal consolidation, the budgets for vehicles have been cut drastically since Schlettwein took office in 2015. The latest documents show that vehicle expenditure from 2015/16 to 2017/18 totalled about N$483.7 million, down from the whopping more than a billion spent in 2014/15.
Schlettwein left his revised vehicle budget over the medium-term expenditure framework (MTEF) unchanged from the one in the main budget tabled in March this year. Total estimated vehicle expenditure for the current budget year is N$11.9 million, followed by N$10 million next year and nearly N$12.9 million in 2020/21.
Government’s brake on expenditure has contributed to the ongoing slump in new vehicle sales. Tighter credit controls introduced in March 2017 have also played a role, as have the recession and the indebtedness of the consumer.
The latest data shows 11 879 new vehicles were sold in Namibia in the 12 months ended September 2018. This is 13.7% lower than the figure for the comparative period in 2017 and a far cry from the peak of 22 664 new vehicle sales recorded in April 2015, according to IJG Securities.
In the first nine months of this year, 3 962 new vehicles were sold, 8.9% less than the number sold by September last year. On a year-on-year basis, light commercial vehicle sales have dropped by 8.8%, medium commercial sales were flat, and heavy and extra heavy sales rose by 12.1%, IJG says.
“If implemented, the proposed changes to the income tax legislation are very likely to have a negative impact on economic growth, and put additional pressure on both individuals and corporates. This means that lower spending on capital assets will reduce the demand which is already under pressure for both passenger and commercial vehicles,” the analysts say.