What you need to know about Shafudah’s budget

Finance minister inister Ericah Shafudah on Thursday announced an operational budget of N$81.3 billion for the 2026/27 financial year, with spending heavily concentrated in the social sector.

The operational budget represents an increase of N$746 million from the revised preliminary outturn of N$80.6 billion recorded in the 2025/26 financial year.

Shafudah said the increase was achieved through a targeted review of major cost drivers, which eliminated wasteful expenditure and reduced inefficiencies across ministries, offices and agencies, generating total savings of N$2.3 billion.

Adjustments were also made to one-off expenditures incurred in previous years, with funds repurposed to support new priority projects.

“The social sector, encompassing education, health, social safety nets and youth empowerment, remains the largest area of government spending. For the 2026/27 financial year, this sector is allocated N$54.3 billion, accounting for 61.7% of the total budget, excluding interest payments,” Shafudah said.

Within this allocation, the Ministry of Education, Innovation, Youth, Sport, Arts and Culture receives N$28 billion, including N$2.8 billion earmarked for subsidised tertiary education and interventions aimed at alleviating school congestion. A further N$939 million has been allocated for education development projects.

The minister said additional social commitments include N$1.7 billion to enhance the salary structure for civil servants. Effective April 2026, employees in grades 15 and 14 will receive a standardised monthly increase of N$700, while employees in grades 13 to 1 will receive a 5% increase in their basic salaries.

“In the 2027/28 financial year, all staff from grades 1 to 15 will receive a 5% base salary increase, and non-management employees will receive a 7% increase in transport allowance,” she said.

Other allocations include N$78 million for judges and magistrates, N$259 million for the recruitment of health professionals, N$108 million for the National Correctional Service, and N$58 million to improve remuneration and benefits for public office bearers.

The safety and security sector has been allocated N$17 billion, representing 19.5% of total expenditure excluding interest payments.

“Defence receives N$7.5 billion, including N$587 million for development projects, while the Ministry of Home Affairs, Immigration, Safety and Security receives N$8.1 billion,” Shafudah said.

The development budget for the 2026/27 financial year is set at N$6.5 billion for state-funded projects, guided by the implementation capacity of ongoing projects during the 2025/26 financial year.

An additional N$4 billion in grant- and loan-funded projects is expected to support infrastructure development across several ministries. Development budget ceilings are projected to increase to N$7 billion in 2027/28 and N$7.7 billion in 2028/29.

To mitigate reductions in development budget ceilings, Shafudah said several projects will be financed through state-owned enterprises and alternative non-budgetary revenue sources, including housing, road and water infrastructure initiatives.

Revenue for the 2026/27 financial year is estimated at N$89.8 billion, representing a 2.5% increase from the revised preliminary outturn of N$87.4 billion in 2025/26.

“The increase is supported by projected Southern African Customs Union receipts of N$24.3 billion, up from N$21.8 billion in the current fiscal year,” she said.

The budget deficit is expected to decline to 5.5% of gross domestic product in 2026/27, before narrowing further to 3.8% in 2027/28 and 3.3% by 2028/29, reflecting the government’s ongoing fiscal consolidation strategy.

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