By: Nghiinomenwa Erastus & Envaalde Matheus
Come first of April 2022, various ministries and government-funded agencies and offices will have another chance to stimulate economic activities using the public pooled funds.
They will have N$61,6 billion allocated to various economic agents through operational and capital project expenditure.
The Minister of Finance, Iipumbu Shiimi, announced yesterday during the tabling of the national budget in parliament.
The operational budget will channel N$56,6 billion in the economy through mainly government consumption and acquisition of some short term assets- highlighting the expected public tenders once salaries are removed.
The remaining N$4,9 billion will be channelled into the economy through already-planned or initiated capital projects. Their treasurer said no new projects would be undertaken for the next 12 months.
In this regard, the planned expenditure will be funded by projected revenue and grants of N$59,7 billion, some 11,7 per cent higher than the estimated revenue for the current financial year.
Out of this N$59,7, Namibian working group and companies and others will contribute collectively N$50,4 billion in taxes.
This is to say what the OMAs are going to spend was not collected from somewhere else or printed by the government but is money collected from working Namibians and companies through NamRa.
Since the government has been running on borrowed fuel, around N$9.2 billion will also be paid to lenders as interest payments, taking up15,4 per cent of projected revenues for the year.
This will bring the projected expenditure ceiling to N$70,8 billion for the next 12 months, starting in April 2022.
Interest will be paid to local and foreign lenders- N$7,5 billion will be paid to local lenders, and the rest will go to external lenders.
Given that revenue to be collected for the next 12 months will be below the planned expenditure, a deficit exists of 11,03 billion. With another finance requirement, the government will have around N$19,4 billion in funding.
A decline compared to N$30,4 billion, which was borrowed for this year.
The planned expenditure did not deviate much from the current budget in terms of allocation. The social sector shares out of the budget envelope have been maintained at 45,9 per cent or N$32,5 billion of the total budget.
The Ministry of Education, Arts and Culture is allocated N$14,1 billion, and the Ministry of Higher Education, Training and Innovation receives N$3,3 billion.
The treasurer explained that keeping with the theme of the budget, we have put our money where our mouth is in channelling the lion’s share of the budget (24,6 per cent) to the sector that primarily serves both the youth of today the youth of tomorrow. Nevertheless, we should never tire of striving for efficiency gains to ensure that such investments are commensurate with better quality outcomes for the benefit of the youth.
The Ministry of Health and Social Services will receive N$8.4 billion in FY2022/23.
Accordingly, a sectoral share of 25,9 per cent of the budget has been allocated to the economic sector in FY2022/23.
While the Public Safety and Order sector takes up the third-largest share of the budget at 17,8 per cent.
According to Shiimi, he did consult various stakeholders. One of the consistent themes that emerged from these consultations was the urgent need for us to reignite economic growth, create jobs, and invest in creating opportunities and activities for the youth.
The economy is expected to grow by 2.9 per cent in 2022, an upward revision of 0.1 percentage points on the back of a recovery in consumption, investment and an improved trade balance. Economic growth is expected to average around 3 per cent per annum in the future.
Shiimi Kills Joy By Taxing Booze
Alcohol consumers and traders will have to dig deeper into their pockets after the finance minister, Ipumbu Shiimi, increased tax on beverages and cigarettes.
Shiimi said tax burdens would be on targeted excisable commodities in conjunction with the SACU agreement and sales volumes.
The inflationary increases were announced on wine, malt beer, spirits, cigarettes, tobacco and cigars.
Beer lovers will pay extra 11 cents for a 340ml can of beer or cider, while a 750ml bottle of wine will cost 17 cents.
He added that a bottle of spirits would be N$4.83 more expensive, while a bottle of sparkling wine would cost an extra 76c.
Smokers are not exceptional to ‘sin’ taxes as they will pay an extra N$1.03 for a packet of 20 cigarettes whilst 25 grams of piped tobacco will cost 37c more. For a cigar, a 23 gram will cost an extra N$6.77.
Shiimi said the excise taxes are consumption-based as consumers have an option not to incur these taxes.
Statistics have shown that the consumption of affected products has been relatively consistent over the years, and ‘sin tax’ has generated massive revenues and income to the line sector. Revenues are directly proportionate to consumption, meaning if consumers reduce their consumption amounts, there will also be a highly noticeable reduction in revenues generated.
The forced ‘sin tax’ is used by lawmakers to balance health and economics as alcohol and cigarettes are considered hazardous to human beings. Email: email@example.com