Wednesday , April 24 2024

Namibia’s economy expected to plummet

The International Monetary Fund has concluded that after years of exceptional growth, Namibia’s economy has entered an adjustment phase.

“Growth is expected to turn slightly negative in 2017, compared to a growth of 1.1 percent in 2016, as large constructions in the mining sector have been completed and the government continues consolidating,” Geremia Palomba, IMF Mission Chief for Namibia following 12 days visit to Namibia

He said growth is projected to resume in 2018 and accelerate thereafter to about 4 percent as production from new mines ramps up and manufacturing and retail activities recover.

Palomba further said the downside risks to this outlook include volatile Southern African Customs Union (SACU) revenue, subdued commodity prices, and fiscal slippages that could undermine policy credibility.

“Namibia’s key challenges going forward are to manage the ongoing adjustment process and preserve macroeconomic stability, while reducing unemployment and income inequality.

The government and the Bank of Namibia have already taken steps to reduce the fiscal deficit and preserve financial stability. However, fiscal and external vulnerabilities are rising and call for additional action.”

IMF said significant fiscal adjustment is needed to ensure debt sustainability and macroeconomic stability, as SACU revenue decline.

“Policies need to address the sources of recent deterioration, including public wage costs, and combine expenditure and revenue measures that can support long-term growth, while safeguarding critical social and development spending.

Strengthening revenue administration, improving budget formulation and expenditure controls, and carefully managing extra-budgetary entities and public enterprises are critical steps to consolidate the fiscal accounts and secure a more equitable burden sharing.”

Check Also

Uranium Boom Loses Steam: Water Woes Threaten Namibia’s Nuclear Growth

Namibia’s ambitions of riding the rising tide of the global uranium market might be dampened …