IMF expresses concern over Namibia’s debt
The IMF has expression concern over Namibia’s fiscal outlook as debt to GDP ratio currently at 16 percent could rise to 30 percent by 2013/14 unless authorities scaled back on expansionary fiscal policies. “Ongoing fiscal expansion could put pressure on the country’s external position by increasing imports, drawing down official reserves, and placing pressure on the prices on non-tradable goods, which would hurt competitiveness,” the IMF said in a statement.
IMF said debt would continue rising beyond that point unless fiscal deficits were significantly scaled back over the medium term.
“While the recent Eurobond issue and robust revenues from the SACU (Southern Africa Customs Union) revenue pool should help the budget and the external position of the economy over the next year or two, significant uncertainties cloud the outlook,” it said.
The IMF said sound fiscal buffers were needed to support the economy because the global economy could remain in a fragile condition for some time and SACU revenues could decline.
On Namibia’s growth forecast, the IMF said it expected Namibia’s economy to slow between 3.5 and 4.0 percent this year, held by problems in the domestic mining sector and a weak global outlook.
“Following strong growth in 2010, activity in the Namibian economy appears somewhat more subdued in 2011,” it said.
In 2010, Namibia’s economy grew by 4.8 percent.
“Although global uncertainties may continue for some time, several promising investment opportunities in the domestic economy should help sustain growth of at least 4 to 5 percent over the medium term,” the IMF said.
The IMF also said it expected inflation to remain well within single-digit rates, in line with the exchange rate peg to the rand.
The IMF team was in Namibia from Nov 9-22 and met with the government for its annual Article IV Consultation.
By Tatenda Malan, AfricaNews reporter in Windhoek, Namibia