Finance Minister on attack

FINANCE Minister Saara Kuugongelwa-Amadhila strongly defended Government’s spending priorities in the National Assembly yesterday, as she set out to shoot down critics who accuse it of spending beyond its means.

By adhering to its fiscal targets, she told the House, Government would ensure that its debt level stayed in check. Kuugongelwa-Amadhila was responding to two weeks of debate on the National Budget for 2005-06, which she tabled in Parliament last month.She told MPs that her Ministry envisaged a Budget deficit of three per cent of GDP and debt stock of 25 per cent.For the first time since Independence, she also forecast a Budget surplus during the 2005-06 financial year.”Not matching these target one to one, however, does not mean we are living in a crisis,” she said.”In fact, the targets are formulated over the medium term and allow for flexibility, depending on the economic cycle.”Kuugongelwa-Amadhila said Government estimated the 2004-05 financial year deficit at 2,4 per cent of GDP and that expenditure would be firmly within the limits set by Government.”We cannot leave our children and grandchildren with unsustainable levels of debt.Future generations will need their precious resources to address the needs and priorities of future days, and should not be loaded with an irresponsible debt burden we have incurred on them,” said Kuugongelwa-Amadhila.The Finance Minister was at pains to stress that she was committed to curbing overspending.She once again vowed to reduce the budgets of Ministries that overspend in this financial year, when drawing up the next budget.Treasury, she warned, would not release any funds until Ministries had submitted monthly planning statements and Treasury Authorisation Warrants.Kuugongelwa-Amadhila pledged to monitor spending on a monthly basis and said this would ensure that unauthorised spending was nipped in the bud.She said a preliminary analysis of expenditure during the last financial year had already shown that no overspending had taken place, while a second run of the General Ledger indicated that expenditure stood at 97 per cent of the amount appropriated.PRIORITIES DEFENDED With much of the debate from the opposition benches having centred on Government’s spending “priorities”, the Minister said that the latest Budget could be proven to reflect “the right priorities”.A controversial topic of debate was Government’s decision to increase spending on defence over the next three years.Defence spending currently accounts for 9,5 per cent of total expenditure.”The sovereignty of our country is one of the highest goods that we determined to hold up, as this is the cornerstone of Namibia’s Independence,” said Kuugongelwa-Amadhila.”We have to ensure that the national defence forces are in a position to defend the country, which requires constant investment and training.”The Minister said the armed forces were operating with equipment inherited from the People’s Liberation Army of Namibia 16 years ago, and they were now due for replacement.”The nature of military equipment is that it is expensive.So you either buy it or you opt not to have a defence force,” she said, drawing considerable support from Swapo MPs on this point.She maintained that increased allocations to the Defence Ministry did not mean diverting priority away from poverty reduction programmes, education, health and job creation.Social, economic and infrastructure sectors, she said, still made up the greatest chunk of the budget at 48,7 per cent.”But from the Budget documents you will also see that priorities are more than just allocations and numbers.We need to look beyond the numbers and focus on the outcomes,” said Kuugongelwa-Amadhila.NEW STATE HOUSE The Finance Minister also tried to defuse the controversy over the building of the new State House.Critics say the money could be better used on other projects.”The new State House is a national property.This State House is not one individual’s project but a national asset,” she said.Kuugongelwa-Amadhila said it was Government’s intention to invest in assets that would be “durable” and that the new building would become a symbol of State power, which, according to her, was important for governance.”We can’t expect our President to squat on the streets and run the country,” she said.State spending on the State House project is now heading towards the half-billion-dollar mark.MORE FOR THE VULNERABLE In her reply to Budget debate, Kuugongelwa-Amadhila also set out to draw MPs’ attention to increased allocations to orphans and vulnerable children, as well as HIV-AIDS treatment.She said the health allocation was geared to providing anti-retroviral treatment at all regional hospitals by the end of the year.It only appeared to have been cut from previous years, because the running of the social grant schemes had been shifted to other ministries, she said.The Finance Minister said as much as she wanted to, she could not increase pensions because of the many “competing demands”.However, she said she hoped grants to needy children would alleviate the plight of the elderly, who often take care of orphans.She stressed that Government had to address the root causes of poverty and come up with a reduction strategy that would also broaden Government’s economic base, because short-term relief measures would eventually become unsustainable.She rejected criticism that Government was heavily reliant on donor funding and said because these arrangements were often coupled with much-needed technical assistance, they led to a significant contribution to the service delivery in such sectors as health and education.Kuugongelwa-Amadhila was responding to two weeks of debate on the National Budget for 2005-06, which she tabled in Parliament last month.She told MPs that her Ministry envisaged a Budget deficit of three per cent of GDP and debt stock of 25 per cent.For the first time since Independence, she also forecast a Budget surplus during the 2005-06 financial year.”Not matching these target one to one, however, does not mean we are living in a crisis,” she said.”In fact, the targets are formulated over the medium term and allow for flexibility, depending on the economic cycle.”Kuugongelwa-Amadhila said Government estimated the 2004-05 financial year deficit at 2,4 per cent of GDP and that expenditure would be firmly within the limits set by Government.”We cannot leave our children and grandchildren with unsustainable levels of debt.Future generations will need their precious resources to address the needs and priorities of future days, and should not be loaded with an irresponsible debt burden we have incurred on them,” said Kuugongelwa-Amadhila. The Finance Minister was at pains to stress that she was committed to curbing overspending.She once again vowed to reduce the budgets of Ministries that overspend in this financial year, when drawing up the next budget.Treasury, she warned, would not release any funds until Ministries had submitted monthly planning statements and Treasury Authorisation Warrants.Kuugongelwa-Amadhila pledged to monitor spending on a monthly basis and said this would ensure that unauthorised spending was nipped in the bud.She said a preliminary analysis of expenditure during the last financial year had already shown that no overspending had taken place, while a second run of the General Ledger indicated that expenditure stood at 97 per cent of the amount appropriated.PRIORITIES DEFENDED With much of the debate from the opposition benches having centred on Government’s spending “priorities”, the Minister said that the latest Budget could be proven to reflect “the right priorities”.A controversial topic of debate was Government’s decision to increase spending on defence over the next three years.Defence spending currently accounts for 9,5 per cent of total expenditure.”The sovereignty of our country is one of the highest goods that we determined to hold up, as this is the cornerstone of Namibia’s Independence,” said Kuugongelwa-Amadhila.”We have to ensure that the national defence forces are in a position to defend the country, which requires constant investment and training.”The Minister said the armed forces were operating with equipment inherited from the People’s Liberation Army of Namibia 16 years ago, and they were now due for replacement.”The nature of military equipment is that it is expensive.So you either buy it or you opt not to have a defence force,” she said, drawing considerable support from Swapo MPs on this point.She maintained that increased allocations to the Defence Ministry did not mean diverting priority away from poverty reduction programmes, education, health and job creation.Social, economic and infrastructure sectors, she said, still made up the greatest chunk of the budget at 48,7 per cent.”But from the Budget documents you will also see that priorities are more than just allocations and numbers.We need to look beyond the numbers and focus on the outcomes,” said Kuugongelwa-Amadhila.NEW STATE HOUSE The Finance Minister also tried to defuse the controversy over the building of the new State House.Critics say the money could be better used on other projects.”The new State House is a national property.This State House is not one individual’s project but a national asset,” she said.Kuugongelwa-Amadhila said it was Government’s intention to invest in assets that would be “durable” and that the new building would become a symbol of State power, which, according to her, was important for governance.”We can’t expect our President to squat on the streets and run the country,” she said.State spending on the State House project is now heading towards the half-billion-dollar mark. MORE FOR THE VULNERABLE In her reply to Budget debate, Kuugongelwa-Amadhila also set out to draw MPs’ attention to increased allocations to orphans and vulnerable children, as well as HIV-AIDS treatment.She said the health allocation was geared to providing anti-retroviral treatment at all regional hospitals by the end of the year.It only appeared to have been cut from previous years, because the running of the social grant schemes had been shifted to other ministries, she said.The Finance Minister said as much as she wanted to, she could not increase pensions because of the many “competing demands”.However, she said she hoped grants to needy children would alleviate the plight of the elderly, who often take care of orphans.She stressed that Government had to address the root causes of poverty and come up with a reduction strategy that would also broaden Government’s economic base, because short-term relief measures would eventually become unsustainable.She rejected criticism that Government was heavily reliant on donor funding and said because these arrangements were often coupled with much-needed technical assistance, they led to a significant contribution to the service delivery in such sectors as health and education.