Transcript The 2003-04 Additional Budget

Additional Budget 2003/04
A presentation by the Institute for
Public Policy Research
31 October 2003
Anything unusual?
• Additional budgets normally involve
more revenue and more expenditure
• Not this year!
• Baptism of fire for new minister
• Gross reduction in revenue of N$1.2
billion
Revenue
• Diamond mining tax down from N$1.16
billion to just N$220 million!
• Other mining tax down from N$150
million to N$20 million!
• Non-Resident Shareholders Tax down
from N$125 million to N$30 million!
• Total gross reduction of N$1.2 billion!
Revenue
Luckily:
• Personal income tax revised up from
N$2.41 billion to N$2.705 billion
• Non-mining company tax revised up
from N$495 million to N$770 million
• VAT revised up from N$2.365 billion to
N$2.550 billion
• EU and SIDA grants of N$55.9 million
Revenue
Leaves net reduction in revenue of “just”
N$328 million or 1% of GDP
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
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%
How did Minister deal with
revenue shortfall?
• Maintained spending at original N$12.2
billion
• Implemented draconian number of
suspensions
• Increased expenditure on remuneration
• No subsidies to parastatals
/9
91 1
/9
91 2
/9
92 2
/9
92 3
/9
93 3
/9
93 4
/9
94 4
/9
94 5
/9
95 5
/9
95 6
/9
96 6
/9
96 7
/9
97 7
/9
97 8
/9
98 8
/9
98 9
/9
99 9
/0
99 0
/0
00 0
/0
00 1
/0
01 1
/0
01 2
/0
02 2
/0
02 3
/0
03 3
/0
03 4
/0
4
90
Chart 2: Changes in expenditure estimates
% change in expenditure over previous budget
25%
20%
15%
10%
5%
0%
-5%
-10%
Source: Budget and additional budget documents
Suspensions
• Total of N$707 million in suspensions across
votes
• Finance, Police, Health and Agriculture
hardest hit (including cherished projects)
• President, Civic Affairs, Higher Education and
Electoral Commission spared
• Total of N$110 million in statutory
suspensions
Deficit
• Lower revenue (N$328 million less)
• Lower GDP growth (N$1.6 billion less)
• Same level of spending (N$12.2 billion)
►deficit estimate rises from 3% to 4% of
GDP
Salaries come first!
• N$303 million in main budget for
improvement of remuneration structure
• Additional N$475 million for
remuneration in revised budget
• Personnel spending 42.5% of total
spending
Key issues
• No real recommitment to fiscal targets
introduced by former minister
• Poor revenue forecasts - especially in
company tax
• Poor shareholder information from Namdeb
• Inappropriate treatment of diamond and
mining revenues
• Policy of salaries first
• No mention of debt and government
guarantees
Summing up
• Crisis budget brought about by fall in
revenue
• Little scope for poverty reduction and
introduction of BIG (Basic Income
Grant)
• More effort required on revenues