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National Budget 200 4 /0 5

National Budget 200 4 /0 5. A presentation by the Institute for Public Policy Research 26 March 2004. Budget Information. MoF documents excellent But what about development budget? Internet Age?. Election Fever?. Theory linking political to economic cycle

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National Budget 200 4 /0 5

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  1. National Budget 2004/05 A presentation by the Institute for Public Policy Research 26 March 2004

  2. Budget Information • MoF documents excellent • But what about development budget? • Internet Age?

  3. Election Fever? • Theory linking political to economic cycle • Interest rates and populist spending • Namibia’s political cycle linked to South Africa’s • Evidence in Namibia?

  4. Evidence? • Lower taxes? No! • Higher deficits? No! • Higher unauthorised spending? No! • Expenditure sweeteners? Maybe a little (Peace Project in 1999 and pensions in 2004)

  5. Good or Bad? On the one hand: • Responsible fiscal management rather than economic populism On the other: • Suggests budget is completely isolated from political process – it simply doesn’t matter

  6. Revenue Highlights • Individual income tax down from N$2.7 billion to N$2.6 billion • Diamond mining tax down from N$220 million to N$52 million • Other mining tax down from N$20 million to just N$15 million • SACU revenue up from N$3.0 billion to N$4.2 billion! • Overall revenue increase from N$10.8 billion to N$12.1 billion

  7. Revenue Overall increase of N$1.3 billion – what to do with it?

  8. The Big Picture • Where do we stand with our fiscal targets set in 2001?

  9. Has MTEF Helped?

  10. Has MTEF Helped? • Actual revenues higher than in MTEF • Actual expenditure higher than in MTEF • Actual deficits higher in two out of three years • Actual trends point other way • Very ambitious new targets

  11. Are we serious about targets? Not really - probably because we can see the costs but not the benefits.

  12. Expenditure Highlights • Severe expenditure restraint 3.7% while inflation is expected to average 6.5% • Slight fall in assistance to political parties in election year • No National Emergency Disaster Fund but maintained Contingency Fund • AA Loans doubled to N$26 million • N$50 million for land purchases • N$366 million for Air Namibia (AN04) • N$160 million for Liberia

  13. Pension • Welcome increase from N$250 to N$300 per month • But only catch up and not enough!

  14. Does Budget Help Poorest? • Reduction in primary education • Reduction in primary health care • Increase in pension but reduction in maintenance grants and FP allowances? • Increase in Combatting of Crime

  15. Key Issues • Across-the-board measures no substitute for analysis and priorities • MTEF must show what does and does not work (outcomes) • Diamond revenues clearer • Proliferation of levies and funds • Need clear policy on welfare grants

  16. Summing up • Welcome technical measures debt and tax • Technocratic budget with little to excite voters • Pension increase welcome • Missed opportunity to balance budget but reduced deficit is positive • Await additional budget

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