1 / 27

Namibia and the world economy

Namibia and the world economy. Philip Clayton Windhoek 15 March 2007. A longer term and regional perspective. 16 September 2005. Namibia. Namibia: fiscal health (% of GDP). Source: EIU Namibia report. Doing business: good in a regional context. Doing Business Starting a Business

Leo
Download Presentation

Namibia and the world economy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Namibia and the world economy Philip Clayton Windhoek 15 March 2007 A longer term and regional perspective 16 September 2005

  2. Namibia

  3. Namibia: fiscal health (% of GDP) Source: EIU Namibia report

  4. Doing business: good in a regional context Doing Business Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business Source: IFC

  5. Growth – OK, but could do better Source:World Markets

  6. Government spending: Namibia out of line Burden of government high. Public sector share of formal employment out of kilter with region. Need to focus on bang for tax buck Government suggests 2009/10 spending at 29.7% of GDP Source:World Markets

  7. Deficit: much work still to be done Revenue can be very variable – fishing, diamonds SACU. Need to look for new sources, while keeping overall burden low. Need to assess value of spending Government pencilling in deficit of 1.1% of GDP over MTEF Source:World Markets

  8. Share of revenue, revised 2006/07 Two fifths of revenue – SACU transfers – will be under pressure in real terms Source: EIU

  9. SACU payments, as % of SA revenue Source: SA National Treasury

  10. Tax payments and compliance Source: PWC

  11. Corporate Tax Corporate income tax, labour tax, and other taxes, Source: PWC

  12. Individual Tax – highest rate Monaco 0% Singapore 21% Namibia 35% SA 40% Norway 51% Source: Worldwide-Tax.com

  13. Today’s Budget: Balance sheet - positives • Pro poor – tax threshold up 50%, to N$36 000 pa, pension allowance up 33% to N$40 000; Grants for 78 000 children over MTEF • Education 22.2% of spending in MTEF (bang for buck?).Continued stated focus on growth • Budget surplus this year of 2.1% of GDP (but specials influence this). • In MTEF, expenditure projected to decline to 29.7% of GDP, from 34.2% IN 06/07 • Development budget up further $800m under MTEF • Debt management improved – prevents lumpy redemptions • Focus on tax compliance – revenue and grants 36.3% GDP in 2007/08

  14. Today’s Budget: Balance sheet - negatives • Rising operational expenditure – 77.7% of total in 06/07, to 82.1% in MTEF. Need is to improve capital stock; looks like economic services gets only 11% • Short on details regarding underperforming parastatals – particularly Air Namibia (and is this subsidy pro-poor?) • Loan funding – even if concessional – to plug hole in revenue. But deficit at 1.1% of GDP over MTEF is sustainable. But, is the decline in share of GDP on government consumption - and declining real spend pegged at $17bn or so for three years - realistic? • Massive underspending on development budget in 06/07 thus far – suggests capacity constraints. Will this continue? • Burden of state on economy not addressed (but perhaps not just Minister’s job)

  15. Budget conclusion • Within tough constraints, Minister has done a good job. Focus on poor, job creation, transforming the economy – all to be applauded. • Thrust of focus on indigenising investment – on unlisted companies, and decreasing share of dual listed that counts – a positive sentiment. But – concern regarding unintended consequences (misallocated capital; another building bubble, etc) • eed critical look at development, and particularly job creation, obstacles. It is not only the measured tax burden that is at issue; the unmeasured regulatory and other compliance is also an obstacle. • With the constraints – a good job. But, need to focus on diversifying revenue; looking critically at all what government does (a third of formal sector works for the state). • MTEF process a good start. With vision – Namibia can achieve a better life for all – despite the tough periods it has gone through

  16. Global context

  17. Emerging markets – now pushing ahead Source: IMF Sustainable thrust

  18. International issues affecting southern Africa • Emerging market sentiment shifts – global risk shifts • Commodity demand and prices (China key) • Middle East, Iraq • North Korea • Zimbabwe • United States and recession; global housing market • GLOBAL ENVIRONMENT REMAINS SOMEWHAT UNSETTLED

  19. Population trends – median age Population dynamics moving absolutely – and relatively – in favour of Africa, Latin America, Asia – against developed worldSource: Group Economics (from UN World Population Prospects)

  20. China and India • China and India together, account for two fifths of the world’s population. And greater region (with Indonesia, Vietnam, etc), over half • China has been growing at 10% pa for two decades; the Hindu giant has begun stirring • Demand for commodities is huge. High value agriculture imports likely to surge (in similar fashion to China shifting from oil exporter, to second-biggest importer). • China now exporting inflation – not deflation: thanks to impact on commodities, and small – but significant – revaluation of Renmimbi. Also, labour costs pushing up even manufactured prices • Note increasing influence of China, and India, in African investments

  21. China’s demand, commodity prices Does the China, India effect mean the boom will last much longer than average? Source: Economist, 22 July 2006

  22. Africa and global growth Long-term uptick in Africa’s performance - but still below AsiaSource: IMF World Outlook, April 2006

  23. South Africa

  24. Economic growth Growth sustainable – Shift from consumption, to uptick in capital spending (private sector and government). Concern is the skills gap; AIDS. Good fiscal policies opening up ability to spend more on social issues Source: SARB, Standard Bank Group Sustainable step-lift?

  25. Fixed investment Source: Standard Bank Group, SARB The big dig

  26. Inflation • Exchange rate • Global inflation and competition • Credible inflation target framework • Capacity utilisation • Vulnerable to external shocks, especially exchange rate Source: SARB, Standard Bank Group Structurally lower

  27. Economic forecasts Growth and inflation outlook benign, but talk about bottlenecks rising. Not sure I am as positive on rand as group is. Source: Standard Bank Group 28 February

More Related