National Budget 2004/05

1
National Budget 2004/05

• A presentation by the Institute for Public Policy
  Research
• 26 March 2004

2
Budget Information

• MoF documents excellent
• But what about development budget?
• Internet Age?

3
Election Fever?

• Theory linking political to economic cycle
• Interest rates and populist spending
• Namibias political cycle linked to South
  Africas
• Evidence in Namibia?

4
Evidence?

• Lower taxes? No!
• Higher deficits? No!
• Higher unauthorised spending? No!
• Expenditure sweeteners? Maybe a little (Peace
  Project in 1999 and pensions in 2004)

5
Good or Bad?

• On the one hand
• Responsible fiscal management rather than
  economic populism
• On the other
• Suggests budget is completely isolated from
  political process it simply doesnt matter

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Revenue Highlights

• Individual income tax down from N2.7 billion to
  N2.6 billion
• Diamond mining tax down from N220 million to
  N52 million
• Other mining tax down from N20 million to just
  N15 million
• SACU revenue up from N3.0 billion to N4.2
  billion!
• Overall revenue increase from N10.8 billion to
  N12.1 billion

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Revenue

• Overall increase of N1.3 billion what to do
  with it?

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The Big Picture

• Where do we stand with our fiscal targets set in
  2001?

Target Latest estimate (2003/04)
Public expenditure 30 36.1
Budget deficit 3 4.2
Stock of public debt 25 30.3
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Has MTEF Helped?
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Has MTEF Helped?

• Actual revenues higher than in MTEF
• Actual expenditure higher than in MTEF
• Actual deficits higher in two out of three years
• Actual trends point other way
• Very ambitious new targets

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Are we serious about targets? Not really -
probably because we can see the costs but not the
benefits.
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Expenditure Highlights

• Severe expenditure restraint 3.7 while inflation
  is expected to average 6.5
• Slight fall in assistance to political parties in
  election year
• No National Emergency Disaster Fund but
  maintained Contingency Fund
• AA Loans doubled to N26 million
• N50 million for land purchases
• N366 million for Air Namibia (AN04)
• N160 million for Liberia

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Pension

• Welcome increase from N250 to N300 per month
• But only catch up and not enough!

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Does Budget Help Poorest?

• Reduction in primary education
• Reduction in primary health care
• Increase in pension but reduction in maintenance
  grants and FP allowances?
• Increase in Combatting of Crime

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Key Issues

• Across-the-board measures no substitute for
  analysis and priorities
• MTEF must show what does and does not work
  (outcomes)
• Diamond revenues clearer
• Proliferation of levies and funds
• Need clear policy on welfare grants

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Summing up

• Welcome technical measures debt and tax
• Technocratic budget with little to excite voters
• Pension increase welcome
• Missed opportunity to balance budget but reduced
  deficit is positive
• Await additional budget