... outrun below estimates

LOBAMBA – The outrun for the current financial year is anticipated to be below the budget estimates.

This is contained in the Mid-Term Budget Review 2021/22 which was presented by the Minister of Finance, Neal Rijkenberg, at the House of Assembly yesterday.

The minister said the reason was the continued commitment control in light of the cash flow problems government faced.

The minister stated that the wage bill, being the largest component of the country’s total expenditure, was estimated at E8.26 billion in the current financial year, which was about 47 per cent of the recurrent expenditure.

“This is a slight increase when compared to the 2020/21 fiscal year outrun of E8.23 billion which could be attributed to the notch increases. At mid-year, personnel costs stand at E4.12 billion and this is about 50 per cent of the total wage bill,” the minister said in his report.

Freeze

He mentioned that despite the hiring freeze, personnel costs remained high compared to the country’s international peers and was now beyond sustainable levels.

The minister said managing the ever-expanding wage bill was a key element to curtailing the expenditure and alleviating the fiscal strain.

“However, we recognise that this is a contentious concern and should be handled with caution and find amicable ways of addressing the wage bill without creating a social burden to government and causing socio-economic challenges.

“In an effort to contain the wage bill, government will implement the fiscal adjustment measures in the medium term pertaining to compensation of employees,” said the minister.

Also mentioned in the report by the minister was that it appeared that the expenditure trends were in line with mid-year expectations. However, he said, from the E2.87 billion annual budget estimates for goods and services, only E0.59 billion had been spent.

Lockdowns

Such a scenario, Rijkenberg said, was as a result of the effected lockdowns meant to contain the pandemic and the prevailing socio-political unrest which adversely affected government operations and private businesses.

“Government also continues to experience cash flow constraints, hence curtailing government expenditure is very critical in the medium-term to ensure the sustainability of public finances,” he said.

The minister mentioned that total transfers were estimated at E3.73 billion for the financial year 2021/22 which was a slight decline from the financial year 2020/2021.

“It is worth noting that the number of public enterprises that are experiencing financial distress are a risk to government.As such, government has had to find ways to reform and streamline them with the view of consolidating those with similar mandates, privatising some and moving others back to government as departments.

“This exercise also aims to ensure improved performance of the entities through the introduction of performance agreements with all public enterprises,” said the minister.