Transcript The 2002/03 Budget

National Budget 2004/05
A presentation by the Institute for
Public Policy Research
26 March 2004
Budget Information
• MoF documents excellent
• But what about development budget?
• Internet Age?
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?
Evidence?
•
•
•
•
Lower taxes? No!
Higher deficits? No!
Higher unauthorised spending? No!
Expenditure sweeteners? Maybe a little
(Peace Project in 1999 and pensions in
2004)
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
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
Chart 1: Changes in revenue estimates
% change in revenue over previous budget
25%
20%
15%
10%
5%
0%
-5%
Source: Budget and additional budget documents
04/05
03/04
03/04
02/03
02/03
01/02
01/02
00/01
00/01
99/00
99/00
98/99
98/99
97/98
97/98
96/97
96/97
95/96
95/96
94/95
94/95
93/94
93/94
92/93
92/93
91/92
91/92
90/91
-10%
Revenue
Overall increase of N$1.3 billion – what to
do with it?
The Big Picture
• Where do we stand with our fiscal
targets set in 2001?
Target
Public expenditure
Budget deficit
Stock of public debt
Latest estimate (2003/04)
30%
36.1%
3%
4.2%
25%
30.3%
Has MTEF Helped?
MTEF 2001/02
Revenue
Expenditure
Deficit
MTEF 2002/03
Revenue
Expenditure
Deficit
MTEF 2003/04
Revenue
Expenditure
Deficit
MTEF 2004/05
Revenue
Expenditure
Deficit
Revenue
Expenditure
Deficit
01/02
02/03
03/04
31.3%
34.9%
3.6%
31.0%
33.9%
2.9%
31.4%
34.3%
2.9%
30.1%
34.5%
4.4%
28.1%
31.1%
3.0%
26.5%
29.0%
2.5%
30.4%
33.4%
3.0%
28.3%
31.6%
3.3%
26.7%
29.7%
3.0%
32.3%
33.8%
1.6%
28.3%
29.6%
1.4%
32.3%
36.6%
4.3%
33.5%
36.2%
2.7%
31.9%
36.1%
4.2%
04/05
05/06
06/07
27.3%
28.3%
1.0%
Has MTEF Helped?
• 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
Are we serious about targets?
Not really - probably because
we can see the costs but not the
benefits.
Chart 2: Changes in expenditure estimates
% change in expenditure over previous budget
25%
20%
15%
10%
5%
0%
-5%
Source: Budget and additional budget documents
04/05
03/04
03/04
02/03
02/03
01/02
01/02
00/01
00/01
99/00
99/00
98/99
98/99
97/98
97/98
96/97
96/97
95/96
95/96
94/95
94/95
93/94
93/94
92/93
92/93
91/92
91/92
90/91
-10%
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
Pension
• Welcome increase from N$250 to
N$300 per month
• But only catch up and not enough!
1990/91
Windhoek interim
CPI
Pension
GDP
Pension
GDP per capita
Pension
2003/04
100
337
N$92
N$6,545 million
N$92
N$4,538
N$92
N$310
N$33,941 million
N$499
N$19,362
N$363
% Increase
337%
543%
395%
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
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
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