Economists happy with Budget

ECONOMISTS say the 2007 Budget tabled in Parliament by Finance Minister Saara Kuugongelwa-Amadhila on Thursday is in line with expectations.

Old Mutual Chief Executive Officer Johannes !Gawaxab described it as welcome, adding that he hoped the projected Budget surplus of 2,1 per cent would contribute to national savings efforts, and also act as a buffer for unforeseen shocks to the economy. “We trust that the surplus will be utilised to support productive sectors for economic growth and that the surplus will not be used to fund recurring expenses such as salaries, that is not indicative of a contraction in Government spending and that it does not compromise development spending over the long term,” said !Gawaxab.Also speaking to The Namibian after the presentation, Daniel Motinga, who heads the Institute for Public Policy Research (IPPR) said although the Budget was touted as pro-poor and pro-growth, more details were needed on how this would be achieved.He was more critical of the allocations to parastatals – Air Namibia (N$136,66 million), Agribank (N$500 million) and Development Bank of Namibia (N$29 million) – saying the effectiveness of such allocations was not being addressed, and that unfortunately privatisation was never mentioned in the Budget.FNB economist Martin Mwinga felt that the emphasis on projects like the Green Scheme and aquaculture would definitely help alleviate poverty in the rural areas.He also said money given to Agribank and DBN would funnel through to small projects and in turn uplift the poor and boost developmental efforts.Another welcome move was the increase of the tax threshold from N$24 000 to N$36 000, which would benefit low-income earners, as well as the increase in the allowable deductions for pension fund contributions from N$30 000 to N$40 000 a year, which is expected to directed towards savings as opposed to consumption.!Gawaxab welcomed the amendments to Regulation 28 of the Pension Funds Act and Regulation 15 of the Long-term Insurance Act, which demand that pension funds and long-term insurers, such as Old Mutual, invest a minimum of five per cent in unlisted Namibian companies.”We trust that appropriate governance measures will be put in place and that the funds will be allocated to credible institutions,” he said.The changes in foreign exchange controls, such as exemption of oil exploration companies to operate foreign currency accounts without any restrictions, are in line with what South Africa said in its annual budget delivered last month.Motinga said this positive move for investment was long overdue because exploration was very expensive and such incentives were necessary.Both Motinga and Mwinga acknowledged that luck was on the side of the Finance Minister in the form of an unexpected SACU windfall of just over N$4 billion, which resulted in a Budget surplus.”Once again luck has been on her side.She has been very, very lucky because without the SACU windfall, she wouldn’t have managed a surplus,” said Mwinga.Commenting on the national airline, Air Namibia, receiving yet another bailout – this time of N$136,66 million, Emile van Zyl of Simonis Storm Securities said it was ‘an ongoing story’, and a report done on the airline was expected to be released soon.Van Zyl added that airlines across the world were struggling, so it was not much of a surprise that Air Namibia was in financial trouble.”The question is, can the country afford what is being given to the airline?” he asked.”We trust that the surplus will be utilised to support productive sectors for economic growth and that the surplus will not be used to fund recurring expenses such as salaries, that is not indicative of a contraction in Government spending and that it does not compromise development spending over the long term,” said !Gawaxab.Also speaking to The Namibian after the presentation, Daniel Motinga, who heads the Institute for Public Policy Research (IPPR) said although the Budget was touted as pro-poor and pro-growth, more details were needed on how this would be achieved.He was more critical of the allocations to parastatals – Air Namibia (N$136,66 million), Agribank (N$500 million) and Development Bank of Namibia (N$29 million) – saying the effectiveness of such allocations was not being addressed, and that unfortunately privatisation was never mentioned in the Budget.FNB economist Martin Mwinga felt that the emphasis on projects like the Green Scheme and aquaculture would definitely help alleviate poverty in the rural areas.He also said money given to Agribank and DBN would funnel through to small projects and in turn uplift the poor and boost developmental efforts.Another welcome move was the increase of the tax threshold from N$24 000 to N$36 000, which would benefit low-income earners, as well as the increase in the allowable deductions for pension fund contributions from N$30 000 to N$40 000 a year, which is expected to directed towards savings as opposed to consumption.!Gawaxab welcomed the amendments to Regulation 28 of the Pension Funds Act and Regulation 15 of the Long-term Insurance Act, which demand that pension funds and long-term insurers, such as Old Mutual, invest a minimum of five per cent in unlisted Namibian companies.”We trust that appropriate governance measures will be put in place and that the funds will be allocated to credible institutions,” he said.The changes in foreign exchange controls, such as exemption of oil exploration companies to operate foreign currency accounts without any restrictions, are in line with what South Africa said in its annual budget delivered last month.Motinga said this positive move for investment was long overdue because exploration was very expensive and such incentives were necessary.Both Motinga and Mwinga acknowledged that luck was on the side of the Finance Minister in the form of an unexpected SACU windfall of just over N$4 billion, which resulted in a Budget surplus.”Once again luck has been on her side.She has been very, very lucky because without the SACU windfall, she wouldn’t have managed a surplus,” said Mwinga.Commenting on the national airline, Air Namibia, receiving yet another bailout – this time of N$136,66 million, Emile van Zyl of Simonis Storm Securities said it was ‘an ongoing story’, and a report done on the airline was expected to be released soon.Van Zyl added that airlines across the world were struggling, so it was not much of a surprise that Air Namibia was in financial trouble.”The question is, can the country afford what is being given to the airline?” he asked.