Finance minister Iipumbu Shiimi has revealed that the government cannot afford the 5% civil servant salary increase demands, which could cost it an additional N$1.2 billion.
“The salary increase is N$1.2 billion that the government doesn’t have and secondly, it’s going to build on salaries that we are already paying. In other words, if we were to give an increase next year, the amount of money that the government will have to find will be even larger. So those are the implications on government finances and also on the revenues,” Shiimi said on Thursday.
He said the government could only afford to increase civil servant’s housing and transport benefits, which could cost it an additional N$334.9 million.
“The offer that the government has made is to adjust benefits that the government can afford,” Shiimi said.
He said the government would be forced to borrow to meet any civil servant salary hikes, a position which could negatively impact the economic recovery of the country.
“If government continues to increase civil servant salaries, mind you, the government is going to borrow this money, this is just going to complicate the economic situation going forward. If we do not allow the economy to recover, there will not be additional revenue coming and it’s going to create a lot of uncertainty, leading to a slowdown in economic activity,” Shiimi said.
“If we allow the economy to slow down, that means the government will not be able to even get the current revenue that it’s getting. It may be a question of a few months or a year and the government will no longer be in a position to make good on the salaries of civil servants. In other words, the government will no longer be able to pay civil servants their current salaries and the old age pension that we give and the disability grant.
The stalemate between government and civil servants comes as the government has not granted any salary increments for five consecutive financial years.
