The State Revenue Fund

In the previous editions a number of issues raised by the Auditor-General relating to the State Account and the State Revenue Account were published and discussed. Here are some other issues raised in the report:

1. Appropriation accounts
This statement summarizes the performance of all ministries/offices/departments (m/o/d) of the Government by comparing the actual expenditure which was incurred during the financial year and the budget as approved by the National Assembly.
The best performers, which are the m/o/d’s who stayed with their actual expenditure within a 2% deviation from the approved budget, were:
Office of the President (1.65%)
Office of the Auditor-General (0.31%)
Foreign Affairs (0.41%)
Education (1.74%)
Defense (0.34%)
Health and Social Services (1.56%)
Prisons and Correctional Services (0.78%)
Veteran Affairs (0.20%)
Performers, who deviated with their actual expenditure from the approved budget by more than 5%, are as follows:
Office of the Prime Minister (5.86%)
National Assembly (7.2%)
Home Affairs and Immigration (10.53%)
Ministry of Finance (12.79%)
National Council (9.01%)
Gender Equality and Child Welfare (7.34%)
Mines and Energy (8.17%)
Environment and Tourism (6.06%)
Agriculture, Water and Forestry (6.64%)
Fisheries and Marine resources (5.71%)
Department of Works (12.92%)
Transport (8.69%)
Lands and Resettlement (6.15%)
Youth, National Service, Sport and Culture (9.97%)
Electoral commission (11.96%)
Anti-Corruption Commission (19.61%)
This means 16 of the 31 m/o/d’s of Government did not do well with their budgets.
The total expenditure reflected an underspending of (4.04%) (previous year: 2.56%) of the approved budget.
2. Standard subdivisions
The budget of each m/o/d of the Government is broken down into various subdivisions which form part of each main division. These are:
Current expenditure: Personnel
Current expenditure: Goods and other services
Current expenditure: Membership fees and subscriptions
Current expenditure: Subsidies grants and other transfers
Capital expenditure: Acquisition of assets
Capital expenditure: Transfers
Lending and equity participation
Development expenditure:
Capital expenditure: Goods and other services
Capital expenditure: Acquisition of assets
Capital transfers
The total underexpenditure on personnel expenditure amounted to N$ 198 101 242 in relation to the approved budget or 1.5% (previous year: over-expenditure of
N$ 191 992 360 or 1.8%).
The deviation from the approved budget for the total operational expenditure was 3.3%. The total development expenditure reflected an underexpenditure of 7%. (Previous year: 8%). Development expenditure is an important expenditure as it stimulates the economy, assists in job creation and may bring in more revenue.
3. Personnel costs
The Auditor-General states in his report that the personnel costs constitute 36% of the total approved budget. In the years before the percentage was 41% and 38.5% respectively. The norm is believed to be in the region of 33% which means that Namibia’s personnel expenditure is still too high.
Improved productivity should reduce the number of personnel employed and assist in cutting on personnel costs.
                4. Standing appropriations
Standing appropriations consist of expenditure which is not subject to the approved annual budget as these expenses are prescribed by legislation such as the State Finance Act, 1991. The expenditures consist of interest paid on loans, capital redemption, other borrowing related charges and redemption of guarantees.
The total expenditure incurred for the year 2011/12 amounted to N$ 10 294 306 529 (previous year: N$ 6 812 015 778), but one has to bear in mind that most of these expenses consist of domestic debt (Treasury Bills) which have been paid back but at the same time re-lending took place. Interest on foreign debt amounted to
N$ 65 204 054 (previous year: N$ 85 251 402) and capital redemption to
N$ 301 007 424 (previous year: N$ 190 332 954).
5. Revenue
Tax related revenue received during the financial year 2011/12 amounted to
N$ 27 147 860 675 (previous year: N$ 21 537 632 881) which is about 59% (previous year: 69%) of the total revenue received. Non-tax revenue amounted to
N$ 2 590 707 946 (previous year: N$ 1 810 240 947, the return on capital from lending and equity participation amounted to N$ 4 760 273 (previous year:
N$ 4 248 560), external grants to N$ 178 744 049 (previous year: N$ 23 515 700) and borrowings to N$ 16 340 718 932 – including an earmarked external loan of
N$ 1 300 000 000 - (previous year: N$ 7 639 467 919. Here it has to be mentioned that N$ 8 903 412 248 (previous year: N$ 5 845 500 151) has been redeemed. The amounts reflected in the Debt of the Government statement reflect the total loans created during 2011/12 as N$ 15 718 726 900. The total loan debt of the Government has risen from N$ 12 719 024 176 to N$ 19 534 338 829 or by 54%.
There were quite number of deviations from the approved revenue budget which have been explained. Explanations on 33 (previous year: 23) revenue headings which deviated by more than N$ 100 000 from the approved budget have not been submitted to the Office of the Auditor-General. This is a re-occurring situation and the Ministry of Finance should attend to this issue.
In the next edition we can look at debt to the Government, financial guarantees and shares.