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YOUR Money, YOUR Budget. MINISTRY OF FINANCE ________ NAMIBIA 2011/12 Citizens Guide to the National Budget NEW … The Budget shows how the Namibian Government is going to spend the money you contributed in taxes. It is important that you know where this money is being spent and this guide to the budget highlights some of the key spending areas. For more detailed information about the budget please visit: http://www.mof.gov. na/budget.htm What is the Budget? The national budget primarily reveals how the government will raise money and how this money will be spent. Government can collect money through a variety of ways, such as income tax, mining tax, Value Added Tax (VAT), grants or trade taxes (for example, taxes on certain goods imported into Namibia). The budget outlines how much money will be collected from each source. The budget then explains how the Government will spend this money towards meeting the national development objectives, from nurses to social grants to roads and schools. Given that funds are limited, the Government has to make hard choices on what is not only best for today’s generation, but also what is best for future generations. The budget is prepared by Namibia’s Treasury, which falls under the Ministry of Finance and is in charge of controlling the money that Government collects from taxes, fines and other sources. However, all Government institutions are responsible for delivering on the Government’s commitments in the budget. Budget Cycle The Budget is split into 4 key stages as shown in the diagram below. This cycle is repeated every year. At the planning stage, the Government estimates the overall amount of money available and discusses with all government institutions (for instance education, health, police) how much money they would need and how much money is available. Once the Cabinet has approved the budget, the Minister of Finance presents it in the National Assembly, followed by debate at the National Council as well as committee level. Following approval, the budget is formally implemented so that plans can be carried out. The final stage is the monitoring and auditing of the budget, to assess progress against the targets outlined in the budget. l TAX CHANGES... Income tax was lowered as part of the 2010/11 budget and the lower levels have been maintained as part of the 2011/12 budget. Increases in Excise Duties (as per SACU agreement): - Unfortified wine 8.4% - Fortified wine 7.4% - Sparkling wine 4.5% - Ciders and alcoholic fruit beverages 7.5% - Spirits 10.0% - Cigarettes 8.9% - Cigarette tobacco 8.2% - Pipe tobacco 10.4% - Cigars 6.0% How is the Budget Funded? Government revenue in 2011/12 is estimated to be N$28.0 billion, an increase of N$5.3 billion from 2010/11. This increase is mainly due to a large increase in Namibia’s share of taxes on goods imported by the Southern African Customs Union members (the SACU Common Revenue Pool). Revenue from other tax sources is also likely to increase as the economy continues to recover from the downturn in 2009 (for example, tax collected from individuals and company profits has increased as the economy recovers). In this year’s budget, spending is N$9.7 billion higher than revenue (meaning a deficit of 9.8% of GDP). Therefore the Government has to borrow money through the issuance of Treasury Bills and Bonds (that people, banks and other companies can buy and earn interest from) in order to cover its spending. However, Government debt will be kept within a manageable level and the increased spending will help the economy in both the short and long term. Size of the Budget The total size of the budget spending in 2011/12 is N$37.7 billion, a significant increase from the N$27.7 billion spent in 2010/11. This year’s budget follows on from the large spending programmes of the last 2 years. The high level of spending in the last 2 years helped to shield the economy from the negative effects of the global economic downturn. This year, the budget has been expanded yet again to ensure the economic recovery continues and to create jobs and improve welfare conditions in Namibia. This Month’s Q&A Tech Focus of the Budget The focus of the budget will be on the key challenges facing Namibia; the high unemployment rate, poverty, inequality, labour skills shortages and a narrow industrial base. Starting this year the Government will implement a Targeted Intervention Programme for Employment and Economic Growth (or ‘TIPEEG’). This programme is specifically aimed at addressing unemployment by focusing on four key sectors, namely, agriculture, tourism, transport and housing and sanitation. It is envisaged that successful implementation of TIPEG will result into the preservation and creation of about 104,000 direct and indirect job opportunities. In transport for example, money will be spent on road construction and upgrading, rail network development and management of road safety. A total of 33,000 direct and indirect jobs are estimate to be created. Housing and Sanitation projects will focus mainly on construction of low cost houses and urban/rural sanitation, preserving/creating approximately 35,000 jobs. Tourism is a rapidly growing sector and a significant generator of employment potential. The TIPEEG programme covers two main programmes in this sector, tourism development and wildlife management. The programmes will result in 10,000 job opportunities over the MTEF. Almost 70% of the Namibian population depend on Agriculture for livelihood, making it a key sector for investment. The TIPEEG programme will result in 26,171 jobs in this sector; more details on agriculture are given below. The sections below highlight some of the specific ways in which the Government will be spending the budget. MINISTRY OF FINANCE 2011/12 Citizens Guide to the National Budget Education Education is one of the most important long term investments that the Government can make. Therefore the Government continues to devote the largest share of the budget to this sector. At Primary level the focus will be on providing the schools with essential educational resources and training teachers on how to utilise these resources effectively. The Government has set itself a target to significantly increase the number of disadvantaged children who enter primary school having completed one year of preprimary. Funding will be provided for the construction of 15 new schools and 12 new hostel facilities. At primary and secondary school, funding will be provided to meet the goal of having a textbook for every learner for critical subjects such as English, Mathematics and Science. For vocational education and training the Government aims to increase enrolment from 6,560 in 2009 to 24,944 in 2014. Funding will significantly increase to achieve this target. Additional resources have also been provided under UNAM (School of Medicine) and Polytechnic of Namibia (School of Engineering) to complement such enrolment. Additional money has also been provided to increase the Namibia Students Financial Assistance Fund (NSFAF) so that more students can be accommodated on the scheme. The NSFAF is used to fund disadvantaged students‟ tuition fees and other related academic costs for higher education. Adult Education programme activities involve the provision of opportunities for approximately 22 000 adult learners to acquire, retain and apply literacy skills in the world of work. Agriculture Health Improving food security is essential to poverty reduction through ensuring that the nutritional needs of citizens are met. Agriculture also holds great potential for economic growth and job creation. The Government continues to improve the health system to ensure that all Namibians have access to high quality medical services. Additional money has been allocated to improve livestock farming, animal health, provision of bulk and rural water supply and improved crop production. Examples of spending areas include provision of training, agronomic irrigation projections to diversify production towards food crops/cash crops, development of marketing and food processing and provision of animal vaccines and veterinary services. The recent hike in global food prices has emphasised the need to increase domestic production. The Government has set a target to increase horticultural production to 60% of annual consumption by 2013/14. The Government aims to achieve this through the Green scheme, the construction of storage facilities and agriculture technology development centres, amongst other initiatives. One of the key Government targets is to increase the number of health facilities providing Antiretroviral treatment (ART) to 117 by 2014, and to have over 120,000 people receiving ART by 2014 (ART is medication for the treatment of HIV). Additional resources have also been provided for the prevention of mother to child HIV transmission. More generally, additional funds have been allocated for improving health care management, acquisition of pharmaceuticals, and for Malaria elimination and TB programmes. Additional funds have also been allocated for the treatment of patients with special or uncommon diseases. MINISTRY OF FINANCE 2011/12 Citizens Guide to the National Budget Tackling Inequality Women, children and the elderly are usually the most vulnerable members of our society. In the face of persistent poverty the Government will allocate additional funding to maintain and improve the social safety nets. The table below highlights the areas of increased funding: Social Grants – Total Spending, N$ Early Childhood Development Support Subsidies Grants to Women's Projects for Capacity Building Maintenance grants, Foster parent allowances (Orphans and Vulnerable Children) Allowance for War Orphans Social Pensions (Old age and Disability) Funeral Plan Namibia Emergency Disaster Funds Veterans (Subvention) Food for Work, Cash for Work School Feeding Programme Total Social Grants As percentage of total budget 2010/11 2011/12 400,000 4,000,000 773,000 1,000,000 369,000,000 348,103,000 400,000 400,000 950,877,000 960,160,000 400,000,000 44,145,000 20,000,000 20,000,000 221,800,000 1,155,319,000 4,400,000 3,000,000 21,347,000 21,647,000 1,988,997 2,557,774 7.2% 6.8% The spending on social grants is estimated to benefit approximately 1.1 million Namibians, (around half of the population). Ensuring the Safety of Citizens The rule of law and security are of vital importance to the wellbeing of citizens and an important condition for economic growth and development. The increased funding to the police will help to increase protection services and control Namibia’s border, improve traffic conditions and reduce road accidents and prevent crime from happening in the first place. Spending will include recruitment and further training of staff, police equipment, increased foot and vehicle patrols and improved crime intelligence. Furthermore, the Government is allocating more funds for training facilities in prisons to provide prisoners with skills that will help their rehabilitation into society after completion of their sentence. MINISTRY OF FINANCE 2011/12 Citizens Guide to the National Budget