Budget on a plate 2019/2020 Presentation by PwC in collaboration - PowerPoint PPT Presentation

Budget on a plate 2019/2020 Presentation by PwC in collaboration with Standard Bank Namibia Safari Hotel and Conference Centre March 2019

Three-linked and Interconnected Fiscal Policy Actions 1 3 Growth 2 Stimulus Structural Reduced Package: Policy Budget Deficit Agricultural, Reforms Youth, SME Namibia Budget Review 2019/2020 PwC 2

Key Focus Areas 01 Enhanced infrastructure investment ( 42%), private sector participation 02 Reduce non-core expenditure 03 Core Spending on Social Sectors Strengthens allocations to social 04 safety nets Namibia Budget Review 2019/2020 PwC 3

Debt Stock Debt Stock as % of GDP FY2018/19 46.3% 2018/19 N$87.5bn N$96.3bn 2019/20 FY2019/20 48.9% FY2021/22 52.3% Namibia Budget Review 2019/2020 PwC 4

2019 BUDGET REVIEW Achieving Growth and Fiscal Stability Naufiku Hamunime

Challenges Facing the Fiscus Budget Rigidity Budget High Public Deficit Debt Government Fiscal Overreliance Weakness on SACU

Challenges Facing the Fiscus Fiscal Weakness Public Debt Budget Deficit 45 1 80 2 0 40 70 0 -1 35 60 -2 Debt threshold -2 30 50 -4 -3 25 Percent of GDP (%) Percent of GDP (%) Billions (N$) Billions (N$) 40 -6 -4 20 -5 30 -8 15 -6 20 -10 10 -7 10 -12 5 -8 0 0 -14 -9 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17 Domestic Debt Stock Foreign Debt Stock Total Debt as % of GDP Actual (N$) Deficit as % of GDP Source: Ministry of Finance

Challenges Facing the Fiscus Budget Expenditure by Subdivision Rigidity 100% 90% 80% 70% Percent of Total Expenditure (%) 60% 50% 40% 30% 20% 10% 0% 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Revised Projection Projection Increase in Personnel Expenditure N$11.9bn N$30.6bn Personnel Goods and Services Subsidies and Current Transfers Interest Payments Capital Assets Capital Transfers Source: Ministry of Finance

Challenges Facing the Fiscus Overreliance SACU Revenue on SACU 25 45 40 20 35 Percentage of Total Revenue (%) 30 Billion (N$) 15 25 20 10 15 10 5 5 0 0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Revised Projection Projection SACU Revenue (N$) SACU Revenue as % of Total Revenue Source: Ministry of Finance

Revenue vs. Expenditure Namibia Budget Review 2019/2020 PwC 10

Operational Expenditure Namibia Budget Review 2019/2020 PwC

Comparison 2018/2019 to 2019/2020 (N$ millions) 01 Namibia Budget Review 2019/2020 PwC 12

Expenditure Allocation per Department 2019/2020 (N$ millions) Namibia Budget Review 2019/2020 PwC

Expenditure Execution Rates 99.60% 94.60% 100% 87.40% 80% 60% 40% 20% 0% Namibia Budget Review 2019/2020 PwC

Spending Priorities 2 1 3 4 5 Old Age Grants Increase Social Sector Public Safety Economic & – Monthly Development Allocation 49.3% Sector Infrastructure Increase N$50 Budget Allocation Allocation Sector by 42.2% 21.7% Allocation 19.2% – Road Capital Projects Namibia Budget Review 2019/2020 PwC 15

Priority Areas of Consolidation Revenue Mobilization Quality Spending Reigning in Expenditure Structural Reforms

Priority Areas of Consolidation Reigning in Expenditure Expenditure 80 45 40 70 35 60 Governments Measures to Percentage of Total Revenue (%) Contain Wage Bill 30 50 Billion (N$) 25 Incremental Wage 40 Increases 20 30 15 Natural Attrition 20 10 10 5 Hiring Freeze 0 0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Revised Projection Projection Expenditure (N$) Expenditure as % of GDP Source: Ministry of Finance

Priority Areas of Consolidation Revenue Mobilization & Revenue Structural Reforms Structural Reforms 70 61.3 59.9 58.6 58.3 60 57.7 56.7 56.7 56.6 Tying Project Funding to Development Plans 50.8 50.8 50 Billion (N$) Increased Level of 40 Oversight e.g. 30 Central Procurement Board 20 Amendments to Public Enterprises Governance Act 10 0 2016/17 2017/18 2018/19 Revised 2019/20 2020/21 Projection Projection 2018/19 Forecast 2019/20 Forecast Source: Ministry of Finance

Priority Areas of Consolidation Turning the Fiscal Corner Budget Deficit Public Debt 1 60 2 120 0 0 100 50 -1 -2 -2 80 40 -4 -3 Debt threshold Percent of GDP (%) -4 Percent of GDP (%) -6 30 60 Billions (N$) Billions (N$) -5 -8 40 20 -6 -10 -7 10 20 -12 -8 -14 -9 0 0 Domestic Debt Stock Foreign Debt Stock Total Debt as % of GDP Actual (N$) Deficit as % of GDP Source: Ministry of Finance

Low Growth and the Fiscus GDP Growth (%) 10.1 7.5 7.2 6.5 6 4.9 4.8 4.4 3 -0.1 -0.1 -0.2 -0.3 -0.6 -0.8 -0.8 -0.9 -1.3 -1.7 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Global Economic Outlook (%) 8 6 4 2 0 2015 2016 2017 2018 2019 -2 -4 World Africa Angola Namibia South Africa Source: IMF; Bank of Namibia; National Statistics Agency

Revenue vs. Expenditure Namibia Budget Review 2019/2020 PwC

Tax Revenue vs. Non-Tax Revenue Namibia Budget Review 2019/2020 PwC 22

Total Tax Revenue (N$ 58 billion) Namibia Budget Review 2019/2020 PwC 23

SACU Receipts & Indirect Tax Comparison Namibia Budget Review 2019/2020 PwC 24

Low Growth and the Fiscus GDP Growth (%) 10.1 7.5 7.2 6.5 6 4.9 4.8 4.4 3 -0.1 -0.1 -0.2 -0.3 -0.6 -0.8 -0.8 -0.9 -1.3 -1.7 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Global Economic Outlook (%) 8 6 4 2 0 2015 2016 2017 2018 2019 -2 -4 World Africa Angola Namibia South Africa Source: IMF; Bank of Namibia; National Statistics Agency

Low Growth & the Fiscus Revenue Lines Revenue vs. Expenditure Projections Under Pressure 80 70 60 Billions (N$) 50 40 30 20 10 0 2018/19 2019/20 2020/21 Revenue (2018 Proj.) Revenue (2019 Proj.) Expenditure (2018 Proj.) Expenditure (2019 Proj.) Source: Ministry of Finance

Comparisons: Corporate Tax Rates 25.75% 35% 28% 30% 32% 22% 04 Zimbabwe Angola South Africa Botswana Zambia Namibia Namibia Budget Review 2019/2020 PwC 27

Comparisons: VAT Rates 15% 15% 16% 10% 15% 12% Zimbabwe Zambia Angola South Africa Botswana Namibia Namibia Budget Review 2019/2020 PwC 28

Namibian Economic Statistics Caiundo Kataba Tombua Mavinga Cahama ANGOLA ZAMBIA Sesheke Luiana Livingstone Kongola Opuwo Rundu ZIMBABWE NAMIBIA Tsumeb Tsau Khorixas Okakarara Epata Orapa Omaruru Ghanzi Gobabis Windhoek Mamuno Walvis Bay Kang Aranos BOTSWANA Maltahöhe Gaborone South Atlantic Ocean Inflation at USD: NAD GDP Growth Unemployment February 2019 Tshabong Exchange Rate Rate Mafikeng 1.0% Lüderitz Aroab 4.4% N$ 14.60 Kuruman 37% Karasburg Upington Kimberley Springbok SOUTH AFRICA De Aar NAMIBIA Bitterfontein Victoria West 0 50 100 150 Kilometers 0 50 100 150 Miles Namibia Budget Review 2019/2020 PwC 29

Achieving Long Term Growth Import 60% of Food Requirements 34% Unemployment (2016) Export Basic Commodities

Achieving Long Term Growth Trends in Agriculture Percentage Contribution to GDP (%) & Food Production 6 5.3 5.1 5 4.9 5 4.5 4.3 4 3.9 4 3.4 3.4 3.3 3.3 2.9 2.9 2.8 3 2.6 2.5 2.5 2.5 2.5 2.4 2.3 2 1 0.6 0.6 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Agriculture & Forestry Meat Processing Grain Mill and Other Food Products Source: National Statistics Agency

Achieving Long Term Growth Growth in Agro Processing Budget Sectoral Allocations FY18/19 (%) Opportunities Administrative 8% Zambia 17 Million Botswana Economic 2 Million 14% Angola Access to 29 Million Regional Infrastructure Market Social 7% 49% South Africa 56 Million Public Safety 22% Zimbabwe 16 Million Source: Ministry of Finance

Structural Policy Reforms 2 3 4 5 1 Energy Mid Year Budget Domestic Asset PPP Legislative Public Regulatory Review Requirements Framework Procurement Act Authority Bill 10 6 7 8 9 Witness 2 nd Land Public Investment Protection Act, NEEEB Enterprise Conference Promotion Act Whistle Blowers Governance Bill Act Namibia Budget Review 2019/2020 PwC 33

Other Reforms Inland Revenue Reforms Namibia Budget Review 2019/2020 PwC 34

Bottlenecks to Growth SME Development Procurement as an Empowerment Tool Regulatory Bottlenecks Address Policy Uncertainty