The 800 pound gorilla in the room

There is no doubt that Minister of Finance Iipumbu Shiimi has to drink from the dual poisoned chalices of taking on the Finance portfolio in the middle of a severe economic recession and then COVID-19. The 800-pound gorilla in the room is that after the smoke clears, there remains a budget deficit of N$17 billion. How will we fill that gap?

The mid-year budget review announced yesterday is, at the end of the day, only a plan; it is not money in the bank. It declares what the government should earn and what it will spend in a particular period of time.

When we read headlines announcing that the quixotical finance minister “frees up N$840 million” we can only shake our heads. We will wait for the economists and pundits to explain that reasoning.

We can only view it simplistically as ordinary people do. We have N$800 to buy groceries however; we have only earned N$650. We are N$150 short. In our mid-month budget review before we go shopping, there is now N$680 to spend, not N$650. This is great. Then, we redo the budget and decide to buy fewer floor cleaners and cheaper meat and use those ‘savings’ to buy more medicine, eggs, milk and bread. But, the main problem still remains. There is a deficit. It is now N$120, but we don’t have the money to buy all that we need. We can borrow at the bank, but we have huge debts already and are spending most of our income paying those off.

We didn’t “free up” more money to buy medicine and eggs when we still don’t have enough to buy what is needed.

Namibia’s mid-term budget says we still have a shortfall of N$17 billion. How in the world can theoretical income be ‘freed up’ when the entire budget is in the red? Euphemisms in a time of economic disaster are unhelpful.

When will we take the unpleasant plunge and cut targetted civil servant jobs? The squeaks made about ‘reviewing’ the civil service budget and voluntary retirements and freezing job vacancies are meaningless. We are continuing to try to kill an elephant with a .22 handgun when we need a serious hunting rifle over 40 calibres to do the job. Shiimi must terminate 25 percent of the civil service workforce over the next 18 months. We cannot afford the salary bill we now have. We need to budget for the costs of programs to ease the difficulties of those who must be retrenched.

We see money made available for Namibia Wildlife Resorts (NWR). Wasn’t it just the other day where there were smiles about NWR turning a profit? COVID-19 likely wiped that out. We would wonder if the funds given are to subsidize operational costs or to attract more tourists. Didn’t NWR just announce a voluntary retrenchment program? It would be more interesting to see the full amount needed by NWR to raise their income levels versus how much was actually granted. When will they close lodges that have been in the red for years and cut their top-heavy management salaries?

The beleaguered and ailing private sector of the tourism industry might be displeased. Their tax dollars are being used to bail out NWR (their competitor), while no similar government support is available for them.

Perhaps we missed the allocation of more money for Air Namibia? Even if the airline declares bankruptcy right now, the Namibian government is still on the financial hook for hundreds of millions in leasing contracts, staff pay-outs, service agreements, and a massive unpaid court order. Is that provided for somewhere?

We can only hope the N$147.6 for the health ministry includes hazard pay for the brave healthcare first responders. These people are putting their health (and lives) at risk to take care of people in need. They must be paid as a priority.

It would be good if more spending on education (N$326 million to the Ministry of Basic Education) guarantees a higher pass rate in grade 10 and 12 exams. But, that never happens. Realistically, with the COVID-disrupted 2020 school year, test scores will likely get worse before they get better.

We cry at the additional borrowing Namibia will have to do, to finance a large part of the national budget. Central government debt is at N$106.1 billion and expected to increase! We have already indebted our children and grandchildren, now we have included our great-grandchildren. What is the plan to earn more money with what we have? Our debt level is unsustainable.

Congratulations to Minister Shiimi. Crunching numbers to find a palatable story that fits the bleak outlook is no easy task.

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