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Institute for Public Policy Research (IPPR)

National Budget 2006/07: Continuity tinged with change

Robin Sherbourne

Institute for Public Policy Research (IPPR)

IPPR Opinion No. 18

March 2006

SARPN acknowledges the Institute for Public Policy Research (IPPR) as the source of this document:
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Last year in her first budget of the new government, Finance Minister Saara Kuugongelwa-Amadhila promised to reduce the budget deficit in 2005/06 and generate a budget surplus in 2006/07 for the very first time since independence. She has proved as good as her word. This year’s budget envisages a small surplus for the coming financial year. However, a closer look at her proposals shows she has achieved this surplus thanks to a significant and unexpected windfall in SACU receipts which has allowed her both to balance the budget and significantly increase spending without raising taxes. The fiscal rectitude displayed in 2005/06 looks like being short-lived. Contrary to last year’s three year outlook, she now expects spending to return to its historical level of around 35% of GDP and the budget to switch back into deficit going forward. After a two year absence, the revised budget is also set to make a return. As expected, the new government has eschewed radical change in tax policy and budgetary allocations. There are, however, signs that genuine improvements in revenue collection are taking place. Despite the absence of radical changes in spending patterns, it is possible to detect less dramatic shifts in emphasis and perhaps a hardening of attitudes towards poor budgetary practices and wasteful spending.

Minister of Finance Saara Kuugongelwa-Amadhila presented the national budget to the National Assembly on 16 March 2006. Since last year’s budget was tabled slightly more than a month after the coming into office of the newly elected Swapo Party government, it was hardly likely that it was to reflect any new thinking and priorities of the new President, Prime Minister and Cabinet. The government has now had a year in which to settle in and it seems reasonable to expect to start to detect the impact of this change on the nation’s primary tool for shaping national development. President Pohamba presented himself as the continuity candidate in the run-off to succeed former President Nujoma. It would therefore not be too surprising if change were to prove hard to identify.

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