Standard Bank. Budget Presentation. Vetumbuavi Mungunda Naufiku Hamunime. March 2017

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1 Standard Bank Budget Presentation March 217 Vetumbuavi Mungunda Naufiku Hamunime

2 Construction Slowdown Reduced Government Spending

3 MACROECONOMIC OVERVIEW

4 ECONOMIC GROWTH Real GDP Growth (%) GDP by sector at Current Prices (N$ millions) Health Education Public Administration & Defence Real Estate & Business Services Financial Intermediation Transport & Communication 4. Hotel & Restaurants Wholesale & Retail Trade Construction Electricity & Water Manufacturing 1. 1 Mining & Quarrying..3 Fishing & Fish Processing Agriculture & Forestry

5 ECONOMIC GROWTH VS. PEERS Regional GDP Growth (%) Namibia Bostwana Kenya South Africa GDP per capita 215 (USD) Kenya Botswana South Africa 4674 Namibia Nominal GDP 215 (USD bn) Kenya Botswana South Africa 11 Namibia

6 ECONOMIC GROWTH VS. PEERS Real GDP by sector 215 (%) Public Administration and Defence Financial Intermediation & Real Estate Transport & Communication Wholesale & Retail Trade, Catering & Accomodation Construction Electricity & Water Manufacturing Mining & Quarrying Agriculture, Forestry & Fishing Namibia South Africa Botswana Kenya

7 ECONOMIC GROWTH VS. PEERS Regional Debt to GDP (%) Foreign Reserves (NAD million) Total Government Debt (NAD million) Namibia Bostwana Kenya South Africa 7, 6, 5, 4, 3, 2, 1, Net Debt

8 GOVERNMENT FINANCES

9 FISCAL OVERVIEW: REVENUE Revenue (NAD million) Main Revenue Categories (NAD bn) 6 Income Tax on Individuals 5 4 Company Taxes 3 2 Domestic Taxes on Goods & Services 1 SACU Receipts 212/13 213/14 214/15 215/16 216/17 217/ Composition of Government Revenue (215/16) 212/13 213/14 214/15 215/16 216/17 Non-Tax Revenue 6% Income Tax On Individuals 21% Year-on-Year Change (%) SACU Receipts 33% Domestic Taxes on Goods & Services 23% Company Tax 15% Total Tax Revenue

10 FISCAL OVERVIEW: REVENUE VS. PEERS Revenue as % of GDP Namibia Botswana South Africa Kenya Namibia Total Revenue & Grants N$52.22 Bn Other Taxes 1% SACU Receipts 33% Non-Tax Revenue (incl. Mineral Royalties) 6% Domestic Taxes on Goods & Services 23% Composition of Revenue (215/16) Income Taxes 37% Botswana Total Revenue & Grants N$64.79 Bn Non-Tax Revenue (incl. Mineral Royalties) 32% Other 1% SACU Receipts 3% Income Taxes 27% Domestic Taxes on Goods & Services 1%

11 FISCAL OVERVIEW: EXPENDITURE Expenditure (NAD millions) /13 213/14 214/15 215/16 216/17 217/18 Composition of Government Expenditure (216/17) Acquisition of Capital Assets 1% Capital Transfers 2% Revenue & Expenditure Year-on-Year Change (%) 213/14 214/15 215/16 216/17 217/18 Subsidies & Other Current Transfers 3% Goods & Other Services 15% Personnel Expenditure 43% Government Revenue Government Expenditure

12 FISCAL OVERVIEW: EXPENDITURE 5 Expenditure as % of GDP Namibia Botswana South Africa Kenya Total Expenditure (NAD bn) Namibia Bostwana

13 FISCAL OVERVIEW: BUDGET ALLOCATIONS Main Ministerial Allocations (% of Expenditure) Poverty Eradication & Social Welfare Higher Education Transport Agriculture, Water & Forestry Urban & Regional Development % Defence Education Health Botswana Health and Social Services Education Finance Defence % Kenya Safety & Security Defence Education Health /15 215/16 216/17

14 FISCAL OVERVIEW: WAGE BILL Personnel Expenditure (NAD bn) /15 215/16 216/ Public Servants (215/16) Namibia Botswana Defence Force, Police & Correctional Services Education Health & Social Services Agriculture, Water & Forestry Works

15 OPERATIONAL VS. DEVELOPMENT BUDGET Operational & Development Expenditure (NAD million) /13 213/14 214/15 215/16 216/17 Operational Development 216/17 Mid-Year Suspensions to the Operational Budget (NAD million) /17 Mid-Year Suspensions to the Development Budget (NAD million) Personnel Expenditure Goods & Other Services Subsidies & Transfers Acquisition of Capital Assets Statutory Expenditure Goods & Other Services Acquisition of Capital Assets Capital Transfers Total Operational Budget cut by N$2.82 Billion Total Development Budget was cut by N$2.7 Billion

16 Necessary Pains for A Secure Future

17 Foundations for A Secure Future 217/18 BUDGET Budget 217/218 Yes/ No Reduce Wage Bill Policy Certainty (NEEEF, PPP) Reprioritize Expenditure Essential Infrastructure Spending (Water, Energy, Social Housing) SOEs Reform & Divestiture Budget Deficit & Debt Measures taken to stimulate increased industrial & economic activity (agriculture, tourism, etc.) Continue with Mid-Term Reforms: freezes in civil service, Performance Contracts, Revise PSEMAS PPP legislation introduced in parliament. NEEEF undergoing revisions after 216 public consultations. N$9 billion allocated to Development Expenditure, increase from N$ 6.3 allocated in previous financial year Development Infrastructure prioritized includes: Railway Rehabilitation, Expansion of Walvis Bay Port, Mass Land Servicing & Housing, and Water & Storage Infrastructure Public Management Reforms Budget Deficit projected to decrease from 6.3% (216/17) to 3.5% Debt to GDP projected to remain consistent at 42%?????

18 THANK YOU

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