There is so much public discussion on how government is cutting its expenditure and how that is affecting contractors and operational activities. What is not being discussed though is the fact that the cut in expenditure is necessary. More so when at N$62,1 billion the government debt levels are now way above its self-imposed target of 35 percent of the GDP (gross domestic product). As of 2015 the country’s GDP in monetary value was put at about N$156 billion or US$11,6 billion.
Given those figures, then the government’s total debt is now at about 40 percent of the country’s GDP. In fact, a local brokerage firm this week estimated the government debt at 43,3 percent as of June, a stark contrast to the 24,7 percent in 2010.
And that is really not good. It brings into question an issue of sustainability – are we or would we be able to pay off our debts in the next five years? More importantly, the concern is whether we, as a country, would be able to raise sufficient revenues in the next few coming years to cover our debts. This is more so because a significant portion of our debt is in hard currencies – foreign currencies – on which we are obliged to pay interest. What do we ought to do, indeed?
In a country that is confronted by a multitude of social and economic challenges, government’s spending is stretched. It can only go as far as examining those that are able to pay taxes, yet are not paying their taxes, and other avenues of collecting taxes.
This is while not forgetting that in our quest to stimulate the economy, not enough employment has been created.
But government’s source of revenue is not infinite. It cannot simply tax citizens as Caesars of the Roman Empire did thousands of years ago. And in a global environment of declining economies, government is still required to keep stimulating economic growth. The coming years would not be a smooth ride.