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Calle destroys macro-economic projection critics

by Kelvin Chiringa

Finance minister Calle Schlettwein has stood his ground and shot back at criticism that he has made wild economic projections that are not realistic and commensurate to what is on the ground. 

Schlettwein has earlier in the mid-year budget review, adjusted upward revenue by N$300 million for financial years 2017/18 while projecting total revenue at about N$56.6 billion in FY2018/19, N$59.78 billion in FY2019/20 and to reach about N$62.5 billion in FY2020/21.

This is in the backdrop of a budget deficit increase from the revised budget estimate of 6.3 percent to 6.9 percent for the 2016/17 financial year.

Mike Kavekotora of PDM took down Calle, saying that his revenue predictions do not reflect reality and tend to be huge while actual revenue numbers get to be way too lower than that.

The finance minister said Namibia follows modern day macro-fiscal forecasting methodology which is continuously aligned to best international practices and the developments in the domestic economy.

“The macroeconomic model in use is an integrated, dynamic model, which integrates macroeconomic and fiscal forecasts in a consistent framework,” the minister said in defense.

He also pointed out that this model allows for the assessment of the impact of various policy scenarios and shocks on various macroeconomic accounts and debt sustainability analyses.

He also said, “The baseline projection scenarios are further anchored on recent actual realisations, principally on the national accounts as produced independently by the Namibia Statistics Agency and actual fiscal realisations.”

Schlettewein elaborately stated that the projections can not be said to be fictitious and an illusion since, as he said, a comprehensive set of industrial survey and expert views collected by an inter-institutional team precede the preparation of the macroeconomic framework and serves as a basis for updated assumptions and input into the modelling framework.

Said the minister, "International assumptions on the global economy, trade and commodity prices are based on year-to-date realisations and outlook by the International Monetary Fund (IMF) and other reputable international bodies,"

He said these consists of peer review considerations from regular engagements such as the Annual Article IV Consultations.

“Adjustments to the microeconomic outlook is inherent in macroeconomic forecasting due to dynamics of economic, trade and financial environment,” said Schlettwein.

He says however that some of the comments made on GDP projections are attempted extrapolations which are not supported by actual facts.

“For instance, GDP outturn for 2016 is published in the 2016 national accounts. Actual nominal GDP for 2016 is N$161.69 billion, compared to the 2017/18 budget projection of N$156.21 billion in calendar year terms,” said Schlettwein.

He added that this indicates that the budget projections were cautious and the outturn was 3.1 percent better than projected.

The minister poured cold waters on his critics while labelling their concerns as shaky in the face of verifiable empirical facts.

Meanwhile, growth for 2017 is estimated at 1.6 percent, a moderate improvement from 1.1 percent recorded a year ago and strengthening to 2.9 percent in 2018 and averaging around 3.7 over the MTEF.