1. A presentation by the Institute for Public Policy Research
Additional Budget 2003/04
A presentation by the Institute for Public Policy Research
31 October 2003

2. Anything unusual?
Additional budgets normally involve more revenue and more expenditure
Not this year!
Baptism of fire for new minister
Gross reduction in revenue of N$1.2 billion

3. Revenue
Diamond mining tax down from N$1.16 billion to just N$220 million!
Other mining tax down from N$150 million to N$20 million!
Non-Resident Shareholders Tax down from N$125 million to N$30 million!
Total gross reduction of N$1.2 billion!

4. Revenue
Luckily:
Personal income tax revised up from N$2.41 billion to N$2.705 billion
Non-mining company tax revised up from N$495 million to N$770 million
VAT revised up from N$2.365 billion to N$2.550 billion
EU and SIDA grants of N$55.9 million

5. Revenue
Leaves net reduction in revenue of “just” N$328 million or 1% of GDP

7. How did Minister deal with revenue shortfall?
Maintained spending at original N$12.2 billion
Implemented draconian number of suspensions
Increased expenditure on remuneration
No subsidies to parastatals

9. Suspensions Total of N$707 million in suspensions across votes
Finance, Police, Health and Agriculture hardest hit (including cherished projects)
President, Civic Affairs, Higher Education and Electoral Commission spared
Total of N$110 million in statutory suspensions

10. Deficit Lower revenue (N$328 million less)
Lower GDP growth (N$1.6 billion less)
Same level of spending (N$12.2 billion)
►deficit estimate rises from 3% to 4% of GDP

11. Salaries come first!
N$303 million in main budget for improvement of remuneration structure
Additional N$475 million for remuneration in revised budget
Personnel spending 42.5% of total spending

12. Key issues
No real recommitment to fiscal targets introduced by former minister
Poor revenue forecasts - especially in company tax
Poor shareholder information from Namdeb
Inappropriate treatment of diamond and mining revenues
Policy of salaries first
No mention of debt and government guarantees

13. Summing up Crisis budget brought about by fall in revenue
Little scope for poverty reduction and introduction of BIG (Basic Income Grant)
More effort required on revenues