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

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

9. The Big Picture Where do we stand with our fiscal targets set in 2001? TargetLatest estimate (2003/04) Public expenditure30%36.1% Budget deficit3%4.2% Stock of public debt25%30.3%

10. Has MTEF Helped?

11. 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

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

14. 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

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

16. 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

17. 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

18. 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