Sacu’s dark cloud has silver lining

NAMIBIA, as well as member countries Botswana, Lesotho and Swaziland, is still owed millions in excess collections from the Southern African Customs Union (Sacu) pool for 2006 and 2007, the Namibian Economic Policy Research Unit (Nepru) said yesterday.

Breaking the good news at their quarterly economic review, Nepru said Sacu’s first ever deficit is proof of just how severe the prevailing global economic crisis is.The think tank explained that the way in which customs revenue is collected and distributed within the customs union makes it possible for the pool to incur a deficit.’Revenue is paid to each country in four annual installments, one in each quarter of the financial year in question, based on each country’s share in intra-Sacu imports. Since current intra-Sacu import data is not available at the time of transfer, the transfers are made based on projections. In addition, there is a time-lag between when revenue is collected and when it is paid into the common revenue pool,’ Nepru said.These forecasts are normally made in November each year, subject to the endorsement of the Sacu Commission and approval by the Sacu Council of Ministers.Once approved, the Council of Ministers mandates the South African Finance Minister, who is responsible for hosting the pool, to pay out the respective shares to member states. An audit is carried out and the accounts are reconciled for the ending financial year during the last quarter, Nepru said.Usually, estimates are conservative and below actual revenue, resulting in additional payments to countries.However, Nepru said, the audit in the last quarter of the financial year 2008-09 indicated that the revenue paid out to countries exceeded what had been collected during that year, thus the subsequent deficit.The decision of what to do with the excess payments of 2006-07 and 2007-08 will be taken at the next Sacu Council of Ministers meeting.According to Nepru, the council has various options.They can either credit the excess payment against the deficit, or they can deduct the overpayment during the current fiscal year from the transfers. Alternatively, the can postpone the adjustment to the next fiscal year, which would give the Finance Ministers of the Sacu members states some extra time to adjust their national budgets. However, they will then probably have to bear the interest for financing the pool’s deficit, Nepru said.’While it remains an option to increase the budget deficit in the short term, adjustments on the expenditure side, combined with continuous efforts to strengthen revenue collection, will be inevitable if the economic crisis continues longer than anticipated and since Sacu transfers are expected to decline in the near future.’ jo-mare@namibian.com.na