Upbeat Calle preaches recovery

23 October 2019 | Economics

Finance minister Calle Schlettwein says the domestic economy is projected to gradually emerge from the recession in 2020 with a moderate growth rate of about 0.8% and about 1.3% by 2021, averaging 2% over the next Medium-Term Expenditure Framework (MTEF).

He has also announced realigned spending amounting to hundreds of millions of dollars and an SME financing strategy, while so-called 'tax holidays' are in the firing line. While delivering his midterm budget review in the National Assembly yesterday, Schlettwein said on the demand side: “We expect a moderate recovery in domestic consumption demand and other elements of final demand, as some of the planned public and private sector investment come on line and the rebound of exports from mining activity. “On the supply side, the recovery will be similarly anchored by moderate positive growth in all main economic sectors. “The projected recovery in the primary industry sector is expected to perform better in the mining and agricultural sectors, as temporary factors in the diamond subsector and rain prospects improve.” Schlettwein also anticipates growth in secondary industries.“Tertiary industries are projected to post-moderate recovery as domestic demand gathers pace with positive effects on the wholesale and retail trade and real estate subsectors,” the finance minister said.





Schlettwein said the domestic economy has been adjusting to shocks and recalibrating to a more sustainable growth pattern.



In 2019 the economy is estimated to contract by about 1.5% relative to the growth rate of 0.2% estimated in the budget.



This marks a third consecutive year of recession.







Realigned spending



An amount of N$96.65 million was allocated to the ministry of agriculture for personnel expenditure, utilities and dryland crop production. Government's drought-relief efforts were strengthened with an allocation of N$67.3 million.



A total of N$88 million was allocated to the orphans and vulnerable children programme under the child welfare ministry to cater for expanded coverage, while N$36 million was allocated to the ministry of home affairs for the Visa Stickers project.



A total of N$184.1 million was allocated to the ministry of education for the recruitment of teachers, the purchase of textbooks and for the ministry's school feeding programme.



Health received N$210.72 million for pharmaceuticals and clinical suppliers, as well as the recruitment of health professionals.



A total of N$88 million was allocated to the ministry of poverty eradication for social grants.







Tax



Schlettwein announced that the launch of the Namibia Revenue Agency (Namra) had been shifted to March 2020 to allow for the finalisation of the transitional processes and staff recruitment.



Amendments to the Income Tax Act, Value-Added Tax Act and Export Levy Act were also being mooted according to Schlettwein. These, according to him, would entail the taxation of trusts and certain commercial entities, eliminating base-eroding tax holidays and preferential tax rates accorded only to some manufacturers and exporters of manufactured goods, for a more uniform treatment of taxpayers through the establishment of the Special Economic Zones.



While not cast in stone, the government was also studying the possibility of introducing a profit tax on betting and gaming entities of 37%.



Schlettwein also outlined intent to investigate the possibility of introducing a lower tax regime for small businesses, as a means of encouraging entrepreneurship and business growth.







Inducing growth



To induce growth, Schlettwein said plans were in place to accelerate the turnaround time for public procurement adjudication and awards, particularly for high-value projects across economic sectors, specifically the roll-out of energy investment projects by NamPower.

Government was also putting work into launching an SME financing strategy that would be housed at the Development Bank of Namibia (DBN), starting with a credit guarantee scheme, mentorship and training programme and a skills-based lending facility for youth entrepreneurs, Schlettwein added. STAFF REPORTER

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