Finance minister Calle Schlettwein has said that the Government has increased the development budget by 42.2 per cent from N$5,5 billion to N$7,9 billion for the 2019/20 financial year.
Schlettwein said this in his response to the latest downgrade by Fitch Ratings whose results were announced Tuesday in Hong Kong.
Fitch Ratings says they expect the Namibian economy to contract by 1,2 per cent instead of the earlier forecast of 0,7 per cent.
Namibia’s long-term non-Rand foreign currency bonds were downgraded from BB+ sub-investment grade assigned in 2017 with a negative outlook, to a BB sub-investment grade, with a stable outlook.
This is a notch lower than the previous rating, reflecting Fitch’s view that the domestic economy remains under recessionary pressures, amidst external shocks arising from the impact of the prevailing severe drought condition, elevated risks of contingent liabilities from certain Public Enterprises and lower sub-regional growth outlook.
Schlettwein, who yesterday confirmed that the government was aware of the assessment done by Fitch in September this year, said that the government, in collaboration with the private sector, has already commenced with the implementation of growth-enhancing measures.
One of such measures, the minister said, is the implementation of an increased development budget by 42.2 per cent, from N$5.5 billion to N$7.9 billion in FY2019/20 as a lever for supporting domestic economic activity.
As such, Schlettwein added, available data indicate the easing of contractions in the construction sector.
He also that the government was also implementing the project financing arrangements with the African Development Bank to the tune of N$4 billion over the next three years for the agricultural mechanization program, rail and road infrastructure projects as well as essential public infrastructure projects in the education sector.
Procurement of these projects, he explained, have reached an award stage and poised to inject activity and enhance the productive capacity of the economy.
According to Schlettwein, the government was also implementing the SME and youth entrepreneurship financing facilities at the Development Bank of Namibia to provide improved access to finance for SMEs and youth entrepreneurs, thus enhancing economic activity, job creation and self-employment.
Other measures being taken, according to the finance minister, are the implementation of directives for local sourcing and local empowerment provisions in public procurement sphere to stimulate domestic productive capacity, local value and jobs; as well as the recommendations of the 2019 Economic Growth Summit in the broad areas of structural policy reforms and private sector investment commitments in the local economy.
In addition, there was an increased mobilization of domestic savings through increased domestic asset requirement from 35 per cent of total assets to 45 per cent by December 2018, thus releasing money into the domestic economy to finance investments in the real and services sectors.
“The government will continue to strike the fine balance between fiscal consolidation and achieving broad-based economic growth in favour of longterm sustainability and to deliver the overall budget as appropriated,” the minister said.
He added that there was also the implementation of Public Enterprises and state assets reforms within the framework of the Public Enterprises Act and effectively managing contingent liabilities arising from certain Public Enterprises and that of public-sector wide wage bill reforms to reduce the wage bill as a proportion of Gross Domestic product and total expenditure.
“We are confident that these policy packages will place the economy on a firm positive and sustainable growth trajectory over the medium to long term. Throughout the years, Namibia has demonstrated its ability and resilience to deal with shocks and also to direct policy actions to address socio-economic development needs,” he said.
