The Minister of Finance and Public Enterprises Iipumbu Shiimi unveiled Namibia’s largest budget ever, amounting to $100.1 billion budget for the 2024/25 financial year, a significant increase from the prior year’s N$84.6 billion allocation.
According to Shiimi, the total budget increased by 12.4% from the revised estimates of the preceding year. Accordingly, the operational budget is estimated at N$74.6 billion, representing an increase of 8.8% over the FY2023/24 estimates, whereas the development budget is N$12.7 billion, reflecting an increase of 58.1%.
This total expenditure includes N$3.2 billion in development projects funded through external loans and grants as well as N$12.8 billion in interest payments.
“The increase in operational expenditure largely reflects the 5% adjustment in the civil service wage bill at a cost of N$1.7 billion to guard against the erosion of purchasing power. Despite significant inflationary pressures over the past several years, civil servants have exercised extraordinary patience, and we would like to extend our heartfelt appreciation for their forbearance during the difficult economic conditions,” Shiimi said.
The wage adjustment is effective from 01 April 2024.
The operational budget includes N$1.4 billion in once-off legacy tax liabilities of selected public enterprises, of which Shiimi has warned that the State will not entertain any further bailout from delinquent State-Owned Enterprises.
This includes those enterprises whose funding was severely reduced due to fiscal consolidation in previous years, such as the University of Namibia (UNAM), TransNamib, the Namibia Broadcasting Corporation (NBC), the New Era Corporation, the National Fishing Corporation of Namibia (FishCor) and the Roads Contractors Company (RCC).
“I would like to emphasise that this is an exceptional once-off exercise to clear the legacy debt of public enterprises accumulated prior to the establishment of NamRA. This action is undertaken to enable NamRA to apply the law to all taxpayers equally. Should any public enterprise accumulate tax liabilities going forward, Treasury is not prepared to offer any support,” Shiimi said.
In addition, the minister said the development budget is equivalent to 4.6% of GDP, which is a significant improvement from prior years.
However, he remains concerned about limited project execution capacity at most Offices/Ministries/Agencies and procurement bottlenecks which continually translate into virementation of funds from and/or underspending on the development budget.
“Lastly, we have budgeted N$12.8 billion to meet debt servicing obligations in 2024/25FY, equivalent to 14.2 percent of revenues and 4.7% of GDP. However, a significant portion of the Government debt portfolio is due for repayment over the Medium Term Expenditure Framework (MTEF),” he said.
“The largest among these maturities is the US$750 million (N$14.3 billion) Eurobond due on 29 October 2025. This is the largest single day debt maturity in the history of our country. In this regard, we are committed to redirecting part of the increase in revenues towards the sinking fund to manage the rollover risk and contain increases in future debt service obligations. This will ensure that we minimise a potentially significant future drain on resources that are desperately needed for infrastructure development, poverty reduction and combating climate change, among others.”
As a result, the Government will transmit at least N$3.5 billion during FY2024/25 and some N$2.0 billion in FY2025/26 of the SACU receipts to the sinking fund to position the government to retire two-thirds of the Eurobond (US$500 million) at maturity.
“While US$250 million which is one-third will be refinanced utilising the most cost-effective instrument in the next financial year, cognisant of the prevailing high interest rate environment and the need to manage debt servicing costs. In this regard, consideration will also be given to the domestic markets as well as financing from Development Finance Institutions (DFIs),” Shiimi said.
Overall, he estimated to realise a positive primary budget balance of 1.4% of GDP during 2024/25FY. Subsequently, the budget deficit is projected at N$8.9 billion in nominal terms, equivalent to 3.2% of GDP in 2024/25FY.
In terms of the budget appropriation, a capital budget of N$970 million was provided to the Ministry of Education, Arts and Culture to cater for the construction and renovation 15 of classrooms and other school infrastructures, including a total of N$6.6 billion earmarked for the railway network development over the MTEF.
A further allocation of N$200 million in FY2024/25 and N$200 million in FY2025/26 has been made to support NamPower in funding the development of the 40MW Otjikoto Biomass Power Station.
Water developments received N$2.2 billion in FY2024/25 including N$1.1 billion in loan-funded projects. In addition, N$700 million was allocated for undertaking various housing initiatives.
The Vote of Sports, Youth and National Service increased by 45.3 percent to N$679.4 million in FY2024/25 and a total of N$2.2 billion over the MTEF period.
Equally, the budget of the Ministry of Gender, Poverty Eradication and Social Welfare increased by 23.2 percent to N$8.0 billion in FY2024/25, and N$24.5 billion over the MTEF.
The Higher Education Vote was allocated N$4.8 billion in FY2024/25, and N$14.7 billion by 2026/27.
During FY2024/25, the Vote of Health and Social Services will receive N$10.9 billion and a sum of N$34.3 billion over the MTEF.
A total of N$1.9 billion in FY2024/25 has been availed to the vote of Agriculture and Land Reform. Still in 2024/25, the vote of Transport will receive a total of N$5.1 billion, compounding to N$14.5 billion at the end of METF.
In support of SMEs and domestic economic activities, Shiimi said the budget of the Ministry of Industrialisation and Trade increased by 31.7 percent to N$365.5 million in FY2024/25 and a total of N$1.2 billion over the MTEF.
The budget of the Ministry of Mines and Energy increased by more than 50 percent to N$381.9 million in FY2024/25 and some N$1.5 billion over the MTEF.
In addition, N$725.5 million has been availed to the Ministry of Environment, Forestry and Tourism, while the Ministry of Finance and Public Enterprises has been allocated a budget of N$8.1 billion in FY2024/25.
The Anti-Corruption Commission received N$106.0 million in FY2024/25 and N$299 over MTEF.
Home Affairs, Immigration, Safety and Security will receive N$7.4 billion in the next financial year, whereas the Judiciary has been allocated N$445.5 million in the next financial year and some N$1.4 billion over the MTEF.
Vote of Justice receives N$674.3 million, about 8.6 percent higher than the previous year and a total of N$2.2 billion over the MTEF.
Finally, the budget of the Ministry of Urban and Rural Development increased by 37.6 percent to N$2.6 billion in FY2024/25.
The Office of the Prime Minister will remain steady at N$1.1 billion in FY2024/25, with the Electoral Commission of Namibia to receive N$438 million.
