Economic analysts are anticipating job creation to be a central theme in the national budget that Finance Minister Ericah Shafudah will deliver on Thursday, with expectations of an expansionary fiscal approach to stimulate growth.
“The most important thing is that we need jobs. Namibians need jobs, they need sustainable jobs, but they need a plan for these jobs,” Economist and Managing Director of High Economic Intelligence, Salomo Hei said.
Hei suggested that Shafudah may table an expansionary budget, which aims to boost economic growth through increased government spending or tax reductions, often used during economic downturns.
“I think we could go into debt. If it’s constructive debt, I’m more than happy to see how that is being spent. But there must be a return on that investment,” he added.
Investment professional Jesaya Hano-Oshike expressed optimism that the budget could surpass last year’s record N$100.1 billion, emphasizing the need to stimulate economic growth.
Last year, former Finance Minister Iipumbu Shiimi tabled a N$100.1 billion budget, which included N$3.2 billion for project funding outside the State Revenue Fund and N$12.8 billion for debt servicing costs, representing an 11.9% increase over the previous year.
“Looking ahead, last year our economy was projected to grow by 4% by the Bank of Namibia (BoN), driven by influence from oil and gas, green hydrogen, and tourism. Hopefully, all of that economic activity could lead to an increase in our budgetary influence coming from our taxes,” Hano-Oshike said.
He added that Thursday’s budget should focus on reducing unemployment while fostering economic growth.
Meanwhile, economist Robert McGregor noted that Shafudah’s recent appointment means she may have had limited influence on this budget, with her impact likely to be more visible in the mid-term budget review later in the year.
“An important signal will be whether there is a continuation or material shift in policy, both in terms of expenditure priorities and tax policy. We also need clarity on the approach for the Eurobond redemption in October,” McGregor told The Brief.
He suggested that Namibia could witness initial signs of more direct fiscal stimulus, particularly in operational expenditure, given the apparent increase in central government employment compared to prior years.
“Given SWAPO’s manifesto and implementation plan, there will likely be some initial capital commitments. However, given the delays we typically see in the execution of capital expenditure, there is a strong likelihood this will once again be underspent (as has chronically been the case). I believe there is a risk that we may see larger deficits than indicated before, although I hope to be wrong, but that delays in development expenditure may help narrow these somewhat,” McGregor said.
He also warned of potential shocks to Southern African Customs Union (SACU) revenue and a possible decline in diamond revenue due to weaker prices and a negative outlook.
“This will need to be balanced against the domestic revenue prospects, which look generally encouraging. I hope to see a continuation of the income tax policies mentioned in previous budget statements, including the commitment to inflation-linked adjustment for personal income tax brackets,” he said.
The budget announcement comes just days after Shafudah and 11 other new Cabinet ministers were appointed on March 22.
