Nam’s financial independence in the balance Extensive
budget cuts announced by Finance Minister Calle Schlettwein may have its risks,
but are vital if the country is to maintain its economic independence.This was the message shared by the Minister this morning at a post-announcement breakfast following his second annual mid-year budget review in Parliament.
“Retaining our fiscal sovereignty is absolutely paramount. If we don’t take these actions now, someone else will do it for us, down the line,” Schlettwein said.
Analysts, while mostly in agreement that the steps were necessary, have expressed fears that the Ministry’s cutting of some N$5.5 billion from this year’s national budget could effectively slip the country into recession solely based on the substantial role government plays in the local economy, at around one third of total activity.
“That (fear) was extensively discussed in deciding how far to go,” Schlettwein told members of the business community at the Hilton Hotel in Windhoek.
“Our feeling is that, in the current situation we can take that risk. We have a new (uranium)mine (Husab) that is expected to soon come into play, we just recently saw a new gold mine going into production, and our tourism sector has been doing well,” Schlettwein said.
Current drought conditions across the country, he said, while drawn out over the last three years, were considered of passing nature regardless.
Expanding on his announcement of more emphasis to be placed on public private partnerships (PPP), Schlettwein said such agreements could both help free up capital expenditure from the State’s side, while providing good investment opportunities for the private sector.
The minister also hinted at possible tax changes, noting that while aggressive taxation would not be the way to go, there was still room to broaden the country’s tax base.
In that sense, he said double taxation agreements with trading partner countries, and a Capital Gains tax (more extensive than current transfer duties), could be expected.
The budget review event was a joint collaboration between PWC, Standard Bank Namibia and Namibia Media Holdings (NMH).
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