Finance Minister Ipumbu Shiimi on Tuesday revised downwards the country’s 2022 growth projections from 2.9% to 2.8% citing global factors such as high interest rates and inflation as well as disruptions on supply chains.
The treasury boss also slashed next year’s economic forecast to 3.4% down from the initial projection of 3.7% when he presented his Budget in Parliament.
“The projected growth in 2022 will be anchored by output from primary industries and tertiary industries on the back of a strong recovery in mining activities, supported by buoyant performance in the diamond sub-sector and a return to growth for most of the tertiary industries,” he said.
“Nonetheless, the recovery in tertiary industries is slower than initially anticipated – dampened by elevated inflation, higher interest rates and declining real incomes. Secondary industries are still projected to contract, in line with expected declines in electricity production and the construction sector, despite positive growth in manufacturing activities,” he said.
Shiimi said the preliminary revenue outturn at the end of September 2022 stood at N$30.4 billion, representing 51% of the initial revenue projections and about 3% higher than the historical mid-year collection rate.
“The strong revenue performance reflects the observed recovery in domestic economic activities coupled with some early gains from tax administration reforms,” he said.
The Finance Minister noted that the country’s total debt stock stood at N$136.2 billion, equivalent to 69% of GDP at the half-year mark.
Revenue for FY2022/23 was revised upwards by N$4.4 billion, from N$59.7 billion to N$64.1 billion, with revenue forecasted to grow by an average of 7.4% annually to reach about N$78.3 billion by FY2025/26.
“The positive adjustments in revenues for 2022/23 reflects strong collections year-to-date, mainly on the categories of income tax on individuals, corporate tax on both diamond mining companies as well as non-mining companies, value added tax and dividends from entities such as Debmarine Namibia,” he said.
Mid-Year Budget Review Highlights:
- An increase in the monthly Conditional Income Grant (CIG) for former food bank recipients from N$500 to N$600 effective in October 2022.
- An increase in the Disability Grant for beneficiaries under the age of 18 from N$250 to N$1,300.
- An increase in the monthly Old Age Grant and the Disability Grant as well as the Orphan and Vulnerable Children Grant by N$100 effective in FY2023/24.
- An allocation for the National Census to be undertaken in FY2023/24.
- A N$1 billion reduction in allocations towards the Public Service Employees Medical Aid Scheme (PSEMAS) over a two-year period, citing gains from envisaged reforms to the benefit structure of the scheme.
- A revised down interest payment of N$9.1 billion in FY2022/23, equivalent to 14.3% of projected revenues for the year.
- The budget deficit is projected to decline to about 5.3% of GDP in FY2022/23 compared to 5.6% estimated in the main budget in February 2022.
- The public debt stock is expected to increase to N$138.4 billion, equivalent to 69.6% of GDP in FY2022/23.
- A comprehensive draft report on findings and recommendations regarding the containment of the public sector wage bill is being scrutinised and analysed by the Office of the Prime Minister before submission for clearance and approval by the Cabinet Committee on Public Service.
- The allocation of an additional N$40 million toward the green schemes in FY2022/23 to revive production activities while the ongoing leasing process unfolds.
- The non-mining company tax rate will be reduced by two percentage points over the two outer years of the next MTEF. Accordingly, the tax rate will be reduced to 31% effective in FY2024/25, with a further reduction to 30% in FY2025/26.
- The Ministry of Finance will undertake an assessment of the consideration to increase the threshold for Income Tax on Individuals from the current N$50,000 to N$100,000 with a view to provide relief to low-income earners.
- New guidelines for the issuance of Good Standing Certificates have been developed by NamRA and will be announced in due course.
- An increase in the development budget by an additional N$497.7 million to settle outstanding invoices and cater for potential shortfalls on critical ongoing projects to ensure continuity and avoid further penalties on road projects.
- A N$99.3 million provision for acquisition of capital assets primarily to purchase medical equipment to support the medical internship programme.
