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Budget Statement

Fiscal Sustainability and Job Creating Growth

Jointly Doing More with Less

Presented by
Hon. Saara Kuugongelwa-Amadhila, MP
Minister of Finance
28 February 2012

What does this Budget Offer?

Honourable Speaker,

1. I rise today to table before this august house the 2012/13 Appropriation Bill and the 2012/13 t02014/15 Medium-term Expenditure Framework (MTEF). I rise to present the budget which allows Government to stay on course in terms of poverty reduction, enhanced domestic economic development, improved service delivery and accelerated job creation. This budget has been formulated and it will be implemented amidst exceptionally uncertain global financial and economic challenges.

2. The budget recognizes the potential negative impact of the global economic environment on the domestic economy and the fiscus. Simultaneously, the budget recognizes inherent structural challenges and urgent national priorities in our economy for which fiscal policy has a prominent role to play.

3. During the previous and current MTEF, we have significantly expanded the budget, thanks to our strong pre-2008 fiscal position. The expansion was aimed at cushioning the domestic economy from the severe impact of the global economic downturn and addressing the structural challenges in the economy with added impetus.

Honourable Speaker,
Honourable Members,

4. The expansionary fiscal policy we pursued since 2008/09 has served our countrym well. We have shielded the economy from the severe effects of the global economic meltdown. After a mild recession of 0.4 percent in 2009, the economy rebounded in 2010 with a relatively high growth rate of 6.6 percent.

5. In terms of fiscal parameters, the expansion was not costless. The budget deficit has reached an estimated 11.2 percent of Gross Domestic Product (GOP) in 2011/12 and Central Government debt has increased from 16.6 percent in 2010/11 to an estimated 27.0 percent in 2011/12. This progression has placed us on the upper limits of our fiscal benchmarks.

Honourable Speaker,
Honourable Members,

6. When His Excellency, President Hifikepunye Pohamba addressed this house last year on the State of the Nation, he said and I quote: "Our country faces many socio-economic challenges that must be addressed urgently. These include unemployment, poverty, socio-economic inequalities, labour skills shortages and a narrow industrial base." These challenges still remain and the budget before you is a continuation of our targeted approach to overcome them.

7. This is a cautious, but targeted budget. It maintains the fiscal expansion envisaged in the 2011/12 to 2013/14 MTEF, amidst an extraordinary challenging global economic environment. The budget summons our collective responsibility to eliminate waste, to be targeted and timely with programme implementation and to do more with less.

8. There are four core areas for fiscal policy during the Medium-term Expenditure Framework (MTEF).

9. First, we have to continue entrenching macroeconomic stability by ensuring that our fiscal operations remain on a sustainable path. In this regard, the MTEF encapsulates fiscal restraint, which maintains expenditure commitments in real terms, but guards against significant expenditure expansion. Our goal to maintain fiscal prudence will be supported by renewed efforts to strengthen domestic revenue collection and administration.

10. Second, this budget is unrelenting in its resource allocation to priority economic and infrastructure sectors, with the objective of placing the economy on a high and inclusive growth trajectory. We have to depart from the episode of jobless growth. By any measure, unemployment and poverty levels remain unacceptably high. This budget carries forth the resource commitments and prioritization engendered in the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG). The budget provides for significant public investment in key economic and services infrastructure in order to address supply-side constraints and create robust conditions for private sector-led growth and job creation in the long-term.

Honourable Speaker,
Honourable Members

11. This is not to discount the progress we have made and the successes we have achieved since 1990. We have maintained macroeconomic stability, fiscal prudence and external financial viability, which have become innate attributes of the SWAPO PARTY-led Government. This is serving us well and drewn recognition from the world's financial markets. We have also managed to provide fiscal support to the economy at the height of the global economic meltdown.

12. In this budget, we are making a timely and collective decision for a gradual withdrawal of significant fiscal expansion, in order to regain fiscal space and to be able to deal with future exogenous shocks on our economy.

13. The priority ...