Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
“Growth friendly pro-poor fiscal consolidation" MALLY LIKUKELA MANAGER: ECONOMIC AND MARKET RESEARCH OVERVIEW OF THE GLOBAL ECONOMY Macroeconomic Monetary Inflation Currency Forex Rate hikes rises cost of borrowing Rate hikes slowdown economy Namibian highly indebted Inflation was depressed in 2015, Accelerated in January 2016. Inflation defeats social safety networks (Grants) objectives • • • • Weak exchange rate Good news for exporters Bad News for importers Additional pressure on the reserves More than sufficient reserves/import cover Weak commodity negatively affected reserves Peg sustained and favorable import cover 1 REVENUE GOVERNMENT REVENUE HAVE SHOWN IMPRESSIVE INCREASE OVER THE PAST DECADE BUT LOST STEEM… Fast expanding economy (VAT collections, personal income tax and corporate tax) Improvements in Tax Administration (Tax base increase, reduction in tax evasions) 2 2016/17 Taxes on Internation al Trade 26% 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 - Domestic Taxes on Goods and Service 27% where does the $ come from Other Taxes 0% Taxes on Income and Profits 46% Taxes on property 1% GOVERNMENT REVENUE TO COME UNDER PRESSURE… • Economic slowdown (income tax to come down) • Commodity price weakening (Profits to come down) • Production slowdown (Turnover, royalties to fall) • SACU Over-payments (Trade slowdown) EXPENDITURE SECTORAL ALLOCATION GOVERNMENT EXPENDITURES HAVE EXPANDED…. (SIZABLE RECURRENT EXPENDITURE ENVELOP) Fiscal consolidation necessary Low execution rate affects development budget GOVERNMENT EXPENDITURES HAVE EXPANDED…. (SIZABLE RECURRENT EXPENDITURE ENVELOP) Fiscal consolidation necessary Low execution rate affects development budget Economic Sector N$8.4 Bn 70.0 3 Infrastructure Sector N$5.2 Bn 60.0 Billion 50.0 40.0 Social Sector N$28.5 Bn 30.0 20.0 HOW IT WILL BE SPENT 10.0 2014/15 2014/15 2015/16 2015/16 2016/17 (Proj) 2016/17 (Proj) SKEWEDNESS OF GOVERNMENT EXPENDITURES ON THE OPERATIONAL AND DEVELOPMENT BUDGET… • Major government spending since 2012/13 • Strong nominal GDP hides the real size od deficit • Deficit figures do not capture investment losses due to devaluation of the currency Administrative sector N$6.0 Bn Public Safety Sector N$13.0 Bn MINISTRIES 4 Education, Arts and Culture Health and Social Services Defence Transport Safety and Security Other Higher Education, Training and Innovation Finance Poverty Eradication and Social Welfare Urban and Rural Development Agriculture, Water and Forestry Industrialisation, Trade and SME Development Veterans Affairs International Relations and Cooperation Gender Equality and Child Welfare Land Reform President Works 13,360,826 7,529,970 6,886,455 5,440,511 5,314,267 5,122,590 3,994,066 3,555,232 3,070,214 2,496,949 2,277,992 1,014,716 972,821 921,028 846,639 726,331 678,812 666,444 - 4,000,000 8,000,000 12,000,000 16,000,000 N$ Billion BUDGET DEFICIT 5 SKEWEDNESS OF GOVERNMENT EXPENDITURES ON THE OPERATIONAL AND DEVELOPMENT BUDGET… • Major government spending since 2012/13 • Strong nominal GDP hides the real size od deficit • Deficit figures do not capture investment losses due to devaluation of the currency GOVERNMENT EXPENDITURES HAVE EXPANDED WHILE REVENUE HAVE LAGGED BEHIND…. Sizable recurrent expenditure envelop Fiscal consolidation necessary Low execution rate affects development budget 2013/14 2014/15 2015/16 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 -10,000,000 -20,000,000 Revenue Expenses Deficit 2016/17 DEBT 6 Namibia’s debt to GDP ratio surpassed 35% of GDP for the first time in 2015…. Fiscal position is poised to deteriorate and fiscal consolidation is critically needed… Lower than expected revenue collection Depreciation of the rand vis-à-vis the US dollar and major currency Large amount of debt issued over the past years are made up of euro bonds Although the debt stock is relatively low, the cost of servicing it has risen compared to other nations • • • • MOF signaled the start of Fiscal consolidation already Reprioritize certain expenditure/projects Privatizing certain SOEs could free up some liquidity Encouraging private investment would relieve infrastructure pressure on the government • PPP and NEEF optimization could be a good start National Development Themes-------(Alignment)------Vision 2030 Basic Enablers Public Infrastructures Poverty Reduction Health Education and skills Institutional Environment Inclusive growth Poverty reduction Prosperity & wealth creation 7 Vision 2030 Infrastruct ure Sector 8% Economic Sector 14% Administra tive Sector 10% Social Sector 47% Service delivery Public Safety Sector 21% Economic Priorities • Public Infrastructure • Manufacturing • Tourism • Logistics Private and confidential ANY QUESTIONS?