Following the shocking downgrading of Namibia’s international credit rating, ﬁnance minister Calle Schlettwein stamped that his ministry had done everything possible to save further economic implosion by putting the poor people ﬁrst.
Speaking at a gloomy press brieﬁng this week, the minister said had he cut the budget any further, the economy would have spiralled and ultimately hurting the most vulnerable. Calle has been faithful to his acclaimed ﬁscal consolidation measures which have been described by critics as “a necessary bitter pill”, and he said the downgrade was uncalled for.
Despite the gloom Moody’s has cast in the local economy, the minister said he would not take his attention away from focusing on poverty eradication, reducing inequities and growing the economy.
“If we had followed a more aggressive consolidation path and cut the budget even more that might have had suicidal consequences. The economy could have been harmed very severely. At those levels, we could not avoid further harm. We could have then gone into the areas where poor people would have been touched, and services to the vulnerable would have been eroded away,” he said.
Calle said the economy was already showing signs of life with green shoots coming from agriculture due to a good rain, tourism, the tertiary sector while construction was showing signs of picking up.
“High-Frequency indicators suggest that economic activity is better this year than a year ago, with expected better output in the Agricultural sector, tourism and recovery in some subsectors of the mining industry,” he said.
Looking beyond the downgrade, Calle said the onus will now be on State Owned Enterprises to play a major part in economic growth through self-sustainability and to constrict the umbilical cord that connects them to the treasury for massive bail outs.
Contradicting the parastatals minister Leon Jooste who has now and again said SOEs are not designed to make a proﬁt, Calle stated that they will now have to start being proﬁtable just like the private sector. He questioned why RCC had failed to rake in proﬁts in the past two years of economic prosperity when the many private companies it contracted did so.
“There is no reason why SOEs cannot make a proﬁt. The construction industry made money and RCC made losses when the economy was good,” he jabbed. To save the budget from painful expenditure, he warned of a looming remodelling procedure on under-performing SOEs which he said would be painful but necessary. The minister further hinted that it was expedient to save billions of money even if it meant many people are losing their jobs as has been seen lately at the beleaguered SME Bank.
“We need to improve the quality of spending. We can’t keep on throwing money at the problem. If the money that is meant to pay salaries is not being used for its purpose, is it not better to take that money away and use it to reduce poverty?” said the minister.
Meanwhile, Calle said he would commit to cutting government debt to the self-imposed threshold of below 36%.
“The important thing that we have to answer is what is government’s stance going forward. What we are conﬁrming is that the consolidation path that we have ventured into, one that continues to align revenue with expenditure to maintain the debt ratio of below 42 percent, that should be maintained.
“In fact, we want to bring down debt to 35%. How are we going to do that? We will further improve the quality of spending; we further want to move into cutting non-essentials spending. We want to strengthen our ability from a budget point of view to address the three top pillars of the NDP5,” he said.