Treasury defends development budget spend

Finance minister Ericah Shafudah has dispelled suggestions that her ministry has not allocated sufficient funds to the development budget, insisting that the government is aware of its obligation toward funding development.

Shafudah made the remarks at a post-budget discussion held this week by Standard Bank and Market Watch/Business 7 and said the government had observed that the absorption of the development budget was not at satisfactory levels.

This follows public reactions, Shafudah said, after it was tabled late last month.

"The issue raised by the public was that the development budget was on the lower side, because on the projections, N$8 billion was allocated to the development budget, however, when you look at the execution rate, the strength of the offices, ministries and agencies (OMAs) to implement the budget, we have realised that the absorption rate was on the lower side," Shafudah said during a panel discussion held to weigh into the budget.

Despite the low allocation, Shafudah stressed that development objectives were also being achieved through investments by public enterprises and through loans the government had secured, effectively increasing the perceived size of the development budget.

"There are a lot of other contributions that are coming from state-owned enterprises (SOEs) that complement the government's efforts as far as the development budget is concerned, plus loans channeled, so if you look at the sum [total], it is not really N$8.6 billion; it's around N$14 billion," she said.

Operational budget sizeable

Shafudah acknowledged that the operational budget was sizeable and that a meaningful balance was achieved between the government meeting its monthly obligations and not neglecting the need to drive development.

"Yes, the operational budget is high. When people analyse it, they focus on personnel expenditure, but there are other activities needed for operations. With support from SOEs, I believe there is some balance," Shafudah said.

For the fiscal year 2026/2027, the Treasury set the development budget at N$6.5 billion in state-funded projects, supplemented by approximately N$4 billion in externally financed initiatives, Simonis Storm said in its budget analysis.

It applauded the government's efforts to strengthen the implementation of development funds.

"Importantly, the prohibition of virements from development to operational spending is a strong governance signal aimed at protecting capital allocations. However, the development envelope remains modest relative to infrastructure needs, which means the quality of execution and the efficiency of procurement become more important than ever," Simonis Storm said.

Total spending for fiscal year 2026/2027 is projected at N$103.6 billion, with operational expenditure rising to N$81.3 billion, Simonis Storm said in its budget analysis.