President Hage Geingob of Namibia said that the decision to cut government spending has hurt the economy and businesses.
Addressing the first Cabinet meeting in Windhoek, Geingob said the decision to cut government spending was a difficult one to take since the country’s independence in 1990.
Namibia resorted to budget cuts in 2016 when the economy slowed down.
Finance minister Calle Schlettwein had defended the budget cuts in July 2016 during the mid-term review, saying that the government had limited room to manoeuvre to survive the tough times in which both the global and local economies were finding themselves.
The budget cuts caused the government to delay paying for services and goods. Small companies that relied on the government closed down or scaled down operations.
The construction sector was the hardest hit after several projects were suspended and hundreds of workers sent home.
“To alleviate the plight of the construction and SME sectors, we resolved and paid all outstanding invoices for the fiscal year 2016/17 by the end of July last year,” Geingob said.
Geingob, however, urged businesses to diversify as the government reflects on how to ensure a diverse and inclusive growth model, based on fiscal prudence and sustainability to weather turbulent economic storms.
“We, therefore, need to ensure our economic fundamentals are resilient to weather future independent intervening variables successfully,” Geingob said.
He added that the government would continue to safeguard the fiscal sovereignty through eliminating or at least reducing wasteful expenditure, avoiding expensive debt uptake and building a sufficient fiscal and reserve buffer.
Earlier, Geingob reshuffled his cabinet, announcing that Vice President Nickey Iyambo had asked to retire on medical grounds.
Former secretary-general of the ruling Swapo Party, Nangolo Mbumba, has been appointed in Iyambo’s place.
Geingob has also appointed former Presidential Affairs Minister Frans Kapofinew as minister of Home Affairs, and Deputy Home Affairs Minister Erastus Utoni as youth minister.
Both the previous office holders were fired on February 1. Minister of Industrialisation Immanuel Ngatjizeko is the new presidential affairs minister.
Geingob has also reassigned Minister of Mines and Energy Oberth Kandjoze to the National Planning Commission as its director general.
Former Justice Minister Albert Kawana has been moved to the attorney general’s office while Attorney General Sacky Shanghala is now justice minister.
Tjekero Tweya, who was information minister until Thursday, has been reassigned to ministry of industrialization, and his position has been taken over by Stanley Simataa.
The Ministry for Urban and Rural Development was under Sophia Shaningwa, who is currently the Swapo Party’s secretary general.
It has now gone to Peya Musheelenga, who was deputy minister at the international relations ministry. The reshuffle came after months of speculation following an aggressive campaign for top Swapo positions in 2017.