Electoral pressure could fuel overspending

As elections loom, politicians need to have a clear vision for the nation in order to secure the votes of the masses to get into power. This could fuel overspending on unrealistic projects to support the ideologies of the campaigning candidates, worsening the country’s fiscal space.At the moment, Namibia is faced with various socio-economic challenges ranging from unemployment, inequality, corruption, housing, rising and unsustainable debt levels, inflation and sluggish economic growth.The million-dollar question is: how will these challenges be addressed? We cannot rule out the fact that the availability of funds plays a crucial role in addressing the challenges faced by the public. Policies that are objective are equally important.We don’t want to see public funds being spent on unrealistic projects that will impress the public in the short term but not reap fruits in the long run.In the past, politicians came up with brilliant ideas, and most of them were failures.Recently, economist Robin Sherbourne published a book titled "Guide to the Namibian Economy" in which he outlined some of Namibia’s policy failures.While there were events beyond Namibia’s control, such as droughts and Covid-19, sluggish growth could be blamed on policy failures.According to Sherbourne, policy failures, amongst others, include poorly managed green schemes, fishing quota allocations, the introduction of a mining export levy and royalty taxes, scrapping the Export Processing Zones (EPZ), manufacturing and export incentives without better offers, and poorly managed state-owned enterprises (SOE’s).The author further questioned if Namibia takes policy seriously.DebtAccording to the Bank of Namibia, total debt stock is anticipated to rise to N$165.5 billion over the medium-term expenditure framework (MTEF) period, which represents 75.2% of gross domestic product (GDP).The debt-to-GDP ratio continued to rise further above the Southern African Development Community (SADC) benchmark of 60% of GDP.The International Monetary Fund (IMF) recently urged the government to implement a fiscal consolidation strategy that is crucial to preserving debt sustainability.That includes containing the wage bill, advancing the reform of state-owned enterprises, and strengthening tax administration. Civil servants recently received a salary increment of 3%.In parallel, the IMF further pointed out that it is important to preserve social spending and growth-supporting public investments and mitigate the impact of higher food and fuel prices on the poorest. Strengthening the public financial framework will support the fiscal consolidation.All in all, I am not against spending. We need a concrete and practical plan. We want to see sustainable and productive spending. Aggressive accountability is also of critical importance.Phillepus Uusiku is a researcher.

Electoral pressure could fuel overspending

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Namibian Sun 2025-04-11

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Electoral pressure could fuel overspending

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Namibian Sun 2025-04-11

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