Give Credit Where It’s Due

WHEN the Minister of Finance tabled her budget about a month ago, little did we know that her budget speech would encompass a fundamental departure from the fiscal policy direction we are used to.

She indicated lower budget deficits and even projected budget surpluses down the three-year budget cycle. This means that Namibia’s so-called “twin deficits” problem, which has been around for a while, may soon be a thing of the past.The concept of the twin deficit came to the fore in the United States during the 1980s, and is used to describe a country’s simultaneous deficit on its trade and services with the rest of the world and the government’s deficit between revenue and expenditure.During the last ten years, more especially around 1998 to 2001, Namibia’s twin deficits, (influenced especially more by the trade deficit), used to be around 15% as a percentage of the Gross Domestic Product.From a global empirical point of view, the twin deficit of more than 10% creates unprecedented international economic problems as an economy would be forced to finance its trade deficit either through drawing down on its foreign reserves or by borrowing more to finance its budget deficit.For the past three years however, we are seeing Namibia’s twin deficits as a percentage of GDP considerably below 10% and forecasted indicators as reflected in the latest budget speech signify that this is going to drop even further.Such a situation shows that the problems of higher trade deficits or budget deficits are over in Namibia.The low twin deficits also suggest easier financing in terms of trade as well as fiscal deficit and indicate for the road ahead timely planning for economic, fiscal and financial stability.Hence, thanks should be accorded to the prudent and effective economic, fiscal and financial management of the relevant fiscal and monetary authorities as they are largely responsible respectively for trade, fiscus, and financial stability that aimed at keeping the twin deficits low.Furthermore, let’s give credit where it’s due and support the Minister of Finance in her endeavour to ensure proper and sound fiscal management and encourage her in terms of sticking to her guns on keeping the twin deficits low for the foreseeable future.Mihe Gaomab Namibia Economic SocietyThis means that Namibia’s so-called “twin deficits” problem, which has been around for a while, may soon be a thing of the past.The concept of the twin deficit came to the fore in the United States during the 1980s, and is used to describe a country’s simultaneous deficit on its trade and services with the rest of the world and the government’s deficit between revenue and expenditure.During the last ten years, more especially around 1998 to 2001, Namibia’s twin deficits, (influenced especially more by the trade deficit), used to be around 15% as a percentage of the Gross Domestic Product.From a global empirical point of view, the twin deficit of more than 10% creates unprecedented international economic problems as an economy would be forced to finance its trade deficit either through drawing down on its foreign reserves or by borrowing more to finance its budget deficit.For the past three years however, we are seeing Namibia’s twin deficits as a percentage of GDP considerably below 10% and forecasted indicators as reflected in the latest budget speech signify that this is going to drop even further.Such a situation shows that the problems of higher trade deficits or budget deficits are over in Namibia.The low twin deficits also suggest easier financing in terms of trade as well as fiscal deficit and indicate for the road ahead timely planning for economic, fiscal and financial stability.Hence, thanks should be accorded to the prudent and effective economic, fiscal and financial management of the relevant fiscal and monetary authorities as they are largely responsible respectively for trade, fiscus, and financial stability that aimed at keeping the twin deficits low.Furthermore, let’s give credit where it’s due and support the Minister of Finance in her endeavour to ensure proper and sound fiscal management and encourage her in terms of sticking to her guns on keeping the twin deficits low for the foreseeable future.Mihe Gaomab Namibia Economic Society