25 Feb 2016 18:40pm
WINDHOEK, 25 FEB (NAMPA) Namibias total debt is projected to increase to N.dollars 63.73 billion in the 2016/17 financial year from N.dollars 61.32 billion in 2015/16.
The total debt is also expected to average around N.dollars 68.22 billion over the Medium Term Expenditure Framework (MTEF).
This forecasted annual growth in public debt is offset by a relatively healthy year-on-year growth in nominal Gross Domestic Product (GDP), Minister of Finance Calle Schlettwein said when he tabled the National Budget for the 2016/17 financial year on Thursday.
Government intends to finance a substantial component of the deficit from the domestic and regional capital markets. Contingent liabilities are projected to increase to an average of around nine per cent over the MTEF as Government extends support to State Owned Enterprises (SOEs) for project financing on the strength of their balance sheets, he noted.
Total debt is now estimated at about 37 per cent of the GDP.
For the 2016/17 financial year, this proportion is projected to reduce to 34,6 percent and is forecast to average around 30,6 per cent over the MTEF, due to the consolidation phase and better improvements in the pace of economic activity.
Given the downside risks to growth and revenue, Schlettwein emphasised that continued measures to curtail significant growth in public expenditure will augur well with the lasting effects of stabilising public debt levels within the threshold of 35 per cent.
Within this framework, no significant additional expenditure is anticipated over the next two years, Schlettwein said.
The minister is optimistic about the medium-term economic outlook, saying in spite of a particularly challenging external economic and financial landscape, the economy is projected to grow by 4,3 per cent in 2016.
This growth trajectory is further projected to improve to 5,9 per cent by 2017 and average around 4,9 per cent over the MTEF, in spite of headwinds from the subdued regional economic and financial environment, weak commodity prices and subdued trade environment.
For the coming financial year, the gradual pace of fiscal consolidation demonstrates Governments commitment to growth-friendly fiscal policy, to cushion the tapering of boom cycles in the construction and retail sectors.
Revenue for the 2016/17 budget year is projected at N.dollars 57.84 billion, an increase of two percent over the previous year given the sharp reduction in Southern African Customs Union (SACU) receipts.
For the MTEF, revenue is projected to increase at a moderate pace of about 7,2 per cent to reach N.dollars 69.82 billion by the end of the MTEF or about 27,5 per cent of the GDP.
This projected annual growth rate in revenue is lower than the actual average growth of about 14 per cent observed in the last three years due to the projected decline in SACU revenues and an adverse external environment.
The major drag and significant risk for revenue growth is the projected reduction of SACU revenues, on account of lower growth outlook for the South African economy.
In the coming financial year, Namibia has to repay a total of N.dollars 2.96 billion to the SACU Common Revenue Pool due to the deficit experienced in the pool and ex-ante (based on forecasts rather than actual results) payments made to member states.
Continued implementation of domestic tax policy and administrative reform agenda as well as the industrial development capacity will contribute to increasing the increasing contribution of revenue from own source, Schlettwein said.