The final quarter of the 2022/23 financial year brings with it an important component in the financial sector and year for Namibia: the 2023-2024 budget speech. The national budget outlines government spending priorities for the financial year ahead. The budget will also outline the key sectors that will receive bulk funding as per their mandate and the administrative sectors that service the government.
The National Budget is the critical exercise of allocating revenues and borrowed funds to facilitate and attain the economic and social goals of the country. It further entails the overall management of government expenditures in such a way that will create the most meaningful and intentional economic impact from the production and delivery of goods and services while supporting a healthy fiscal position for the State.
Government budgeting is important because it enables the government to plan and manage its financial resources to support the implementation of various programmes and projects that best promote the development of the country. Through the budget, the government can prioritise and put into action its plans, programmes and policies within the constraints of its financial capability as dictated by economic conditions.
The past few budget speeches have been marred by Covid-19 which stimulated recovery methods and strategies within the budget itself. The national budgets after that were about aligning spending to growth, servicing social sectors, and returning stability to Ministries.
The 2023-2024 financial year is an important one as it marks the approaching end of a 10-year financial cycle for President Hage Geingob`s administration. Why is this important? It will allow us to learn and code from the administration’s 10-year financial cycle. Understand what were the priorities the administration was pushing for and scenario plan how it will affect the next administration.
The government has recently merged the Ministry of Finance and Ministry of Public enterprises. Now coined as the Ministry of Finance and Public Enterprises. There is ample opportunity for reform in this move. Public Enterprises have for long been enjoying funding priority from the public purse, this is against the back of them needing to become financially stable and fund their own operations. It is our expectation that the treasury will keep a tight grip on the finances and modus operandi of public enterprises. This will allow resources to be channeled to other priorities.
What are our key expectations in the budget this time around?
Over the years, Finance Minister Iipumbu Shiimi has been creative in theming the National Budgets for the past 3-4 financial years. Last year’s budget theme was: ‘Reimaging a Better Future for the Youth’. This time around, we anticipate a theme that will set the pace for 2023 and what we are fighting for.
The 2023-24 National Budget will be tabled on the back of a CMA Induced-rising repo rate, soaring inflation, rising debt: GDP ratio, unemployment and job creation. All these are important areas that we expect the Finance Minister to come out and detail how spending will be allocated to deal with the issues above.
On Economic Growth, an uphill battle remains how the budget can be maneuvered to sustain comfortable GDP growth levels. GDP growth surpassed 4% in the third quarter of the financial year. This is a slowdown from the 5% it grew during the second quarter. We remain optimistic that the fourth quarter will bless us with similar figures to end the financial year on a good note.
The country has its fair share in the international arena with regard to oil discovery by oil giants and green hydrogen investments. These discussions should not be taken lightly as it details prospects for local economic activity and GDP growth in the long run.
The above brings in the question of structural reform: looking at how the economic landscape is due to change with the above-mentioned, now is the time to push for structural reform that will stand the test of liberal pressure and time.
But what is structural reform and what is its applicability to this?
Structural reforms are essential measures that change the fabric of an economy, the institutional and regulatory framework in which businesses and people operate. They are designed to ensure the economy is fit and better able to realise its growth potential in a balanced way. Its applicability here is that the change in the economic landscape cannot only benefit by way of royalty but as direct shareholders in the private sector.
The case for GRN intervention in business cannot be under emphasised as this allows the seemingly delicious private sector cake to be shared.
The Penultimate battle in this regard refers to the looming end of financial years under the current administration. Post 2025, we will see a new leadership ushered into power with its own economic agenda and plans. So far what we can pick up is that the party set to win this battle will be a ‘Forward Thinking Party’ that will address the issues of the day.
The pressure is on our Finance Minister to ensure a steady and comfortable end of financial years for the current administration, Hagenomics as I term it.
-Dylan Mukoroli is passionate about Development Finance and Community Asset Management.
