07 Feb 2022

Government spending should be focused on productive and prioritised activities.

Presenting the budget speech February 7, the Minister of Finance and Economic Development, Ms Peggy Serame, said emphasis must be on ensuring that spending on programmes and projects was carried out efficiently.

“Waste must be reduced, much more attention paid to achieving value for money and accountability strengthened,” she said.

She said the expenditure budget would always face demands greater than the available fiscal resources.

Ms Serame said public spending was essential for stimulating the economy and providing public services.

 Additionally, Minister Serame said public spending was equally critical in financing investment that would provide public goods to support future growth and efficiency.

Ms Serame said the fiscal position of the economy had deteriorated over the years, resulting in substantial budget deficits, owing partly to the impacts of COVID-19.

She said there was a progressive decline in fiscal revenues relative to the size of the economy, adding that the situation was largely reflecting lower mineral revenue as the diamond industry had matured and the costs of mining having increased.

Ms Serame said the decline was also affected by the volatility of revenues from the Southern African Customs Union (SACU).

She said Diamonds and SACU historically accounted for almost two third of the total revenues. 

The minister said domestic revenue generation from taxes, fees and charges had been relatively low.  “The result of low mineral revenues has been a structural change in the budget,” said Minister Serame.

She said persistent and structural budget deficits would eventually lead to an unsustainable level of public debt, therefore require addressing both domestic revenue mobilisation and expenditure levels.

Minister Serame undescored need to deal with the challenge to broaden the domestic revenue base by extending the tax net and improving the efficiency of revenue collection.

 “Attention will also be paid to ensuring that those who should pay taxes do so,” she said.

She said planned activities aimed at broadening the domestic revenue base and enhance efficiency to collect revenue included among others, a review of taxation laws, use of Information and Communications Technology (ICT) to improve collection efficiency and increased tax audits and inspections.

 Minister Serame also stressed on enhanced public education for taxpayers to achieve better compliance.   BOPA