Govt rolls out N$8,1b Covid-19 stimulus
Written by admin on April 3, 2020
THE government has committed N$562 million as an emergency income grant to support households that have lost incomes as a result of the Covid-19 pandemic.
This funding is part of an N$8,1 billion first phase of an economic stimulus and relief package on the impact of Covid-19 on the economy and households.
The package is comprised of N$5,9 billion as direct support to businesses, households and cash flow acceleration payments for services rendered to the government and N$2,3 billion of additional support, guaranteed by the government.
Finance minister Iipumbu Shiimi yesterday announced the package, saying the affected households – people who lost employment in both the informal and formal sectors – would receive a once-off payment of N$750. These funds are applicable during the 21-day lockdown period.
The figure was calculated based on the national poverty line of roughly N$250 per person per week. Namibians between 18 and 60 years may apply for the grant.
The grant aims to cater for Namibians who lost their jobs as a result of the lockdown in the Khomas and Erongo regions where movement is restricted with only essential and critical service providers allowed to leave their homes.
Namibia declared a state of emergency after reporting two confirmed cases.
“This is to support households to cope with reduced income, increased health related spending and other hardships due to the virus outbreak. Payment will be made by the government in collaboration with the Social Security Commission and other financial sector and information communication technology partners within seven days, utilising the banking sector’s ATM infrastructure,” the minister explained.
Shiimi further said to give cash flow-constrained taxpayers a breather, the government has made a provision for them to use a government guarantee to part of their tax payment in 2019, to be repaid after one year. They may borrow these funds from commercial banks.
“The interest rate will be concessional, below prime, on the back of a government guarantee. The total guarantee is capped at the maximum of N$1,1 billion, based on the Pay As You Earn register and the potential loan size. The government, in collaboration with the banking institutions may institute statutory and administrative measures to enhance compliance with loan conditions,” Shiimi said
Additionally, the government estimated that N$10 million would be needed to pay for opened water points for people without water cards. This is to ensure that proper hygiene is kept at all times to combat the further spread of Covid-19.
To allow for the health ministry to deal with the Covid-19 outbreak, the finance minister announced that N$1,1 billion would specifically be for that.
BUSINESS SECTOR PACKAGE
Shiimi said to avoid further retrenchments in sectors hit the hardest, N$400 million has been set aside as a wage subsidy. This would be to aid businesses in retaining jobs in the tourism, hospitality, travel and aviation and construction sectors.
In one week, the government would also settle value added tax (VAT) refunds to enhance the cash flow of enterprises paying VAT. Additionally, the government would also accelerate payments of overdue and undisputed invoices for goods and services provided to the government. This amount stands at roughly N$800 million.
“The government will guarantee a N$500 million, concessional rate loan scheme for non-agricultural small businesses, with funds provided through the Development Bank of Namibia. The loans will be extended to businesses experiencing or expected to experience cash-flow pressure as a result of a loss in revenue due to Covid-19.
“Government will further guarantee a N$200 million loan scheme for farmers and agricultural businesses by extending a guarantee for such loans to the Agricultural Bank of Namibia. The loans will be extended to cash flow-constrained farmers and small to medium-sized farming businesses who have experienced a significant loss of revenue,” said the minister.
He added that a relief measure to borrowers may be a capital repayment moratorium where a holiday is allowed on the principal amount for a period ranging between six months, but not exceeding two years.
Cash-strapped businesses in non-mining sectors may take out loans from commercial banks, a 1/12th of their tax payment in the previous tax year, to be repaid after one year. The interest rate will be concessional, below prime, on the back of the government guarantee, capped at N$470 million, said the minister.
“There would be a relaxation of labour regulations to protect jobs. To avoid major retrenchments and business closures, employers including the government and business owners, will be allowed to negotiate a temporary 20% reduction of salaries and wages during the crisis period, and 50% for the worst-hit industries. The negotiations will be undertaken through a consultative process with employees and labour unions,” Shiimi said.
Adapted from The Namibian Newspaper