Finance and Public Enterprises Minister Iipumbu Shiimi tabled a N$100.1 billion national budget in the National Assembly this afternoon.
This is the first time Namibia's national budget exceeds the N$100 billion mark.
Finance Minister Iipumbu Shiimi tabled his fifth full budget under the theme, 'Continuing the Legacy of His Excellency, President Hage G. Geingob, by Caring for the Namibian Child'.
In doing so, he told fellow MPs that the strengthening of domestic economic fundamentals and the resultant strong revenue performance have created an avenue to expand the spending envelope, accelerate service delivery, and address the most pressing needs while improving infrastructure development.
The Finance Minister pointed out that this total expenditure includes N$3.2 billion in development projects, funded through external loans and grants, as well as N$12.8 billion in interest payments.
The total budget increased by 12.4%, from the revised estimates of the preceding year.
"Accordingly, the operational budget is estimated at N$74.6 billion, representing an increase of 8.8% over the FY2023/24 estimates. The increase in operational expenditure largely reflects the 5% adjustment in the civil service wage bill at a cost of N$1.7 billion to guard against the erosion of purchasing power. Despite significant inflationary pressures over the past several years, civil servants have exercised extraordinary patience, and we would like to extend our heartfelt appreciation for their forbearance during the difficult economic conditions. The wage adjustment is effective from 01 April 2024."
The operational budget also includes N$1.4 billion in once-off legacy tax liabilities for selected public enterprises.
This includes those enterprises whose funding was severely reduced due to fiscal consolidation in previous years.
The beneficiaries include the University of Namibia (UNAM), TransNamib, the Namibia Broadcasting Corporation (nbc), the New Era Corporation, the National Fishing Corporation of Namibia (FishCor) and the Roads Contractors Company (RCC).
"I would like to emphasise that this is an exceptional once-off exercise to clear the legacy debt of public enterprises accumulated prior to the establishment of NamRA. This action is undertaken to enable NamRA to apply the law to all taxpayers equally. Should any public enterprise accumulate tax liabilities going forward, Treasury is not prepared to offer any support."
The Finance Minister also pointed out that the development budget has been increased significantly by 58.1% to N$12.7 billion to close infrastructure gaps.
However, he expressed concern over limited project execution capacity at most government offices, ministries, and agencies and procurement bottlenecks that translate into underspending on the development budget.
The national budget also makes provision for N$12.8 billion to meet debt servicing obligations.
"The debt servicing metrics, although stabilising, still remain above the desired benchmark of 10% of revenues. Therefore, the fiscal framework provides for specific measures to maintain public debt on a reduction path and ensure that debt is raised in the most cost-effective manner. Overall, we estimate achieving a positive primary budget balance of 1.4% of GDP during FY2024/25. Subsequently, the budget deficit is projected at N$8.9 billion in nominal terms, equivalent to 3.2% of GDP in FY2024/25. In the interest of pursuing fiscal sustainability and debt stabilisation, we aim to maintain a primary surplus and consequently keep the budget deficit below 4% of GDP over the MTEF."
The government will also employ a combination of domestic debt instruments and funding from multilateral organisations to finance ongoing infrastructure projects in the road, water, and railway sectors.