Press Release No. 20/75

IMF Staff Concludes Visit to Namibia

March 2, 2020

• Real GDP is projected to turn positive during 2020 as the impact of last year drought fades and mining production picks up.
• Downside risks to this outlook include a decline in global growth as COVID-19-virus risks materialize, and possible lower-than-expected Southern African customs Union (SACU) revenue and fiscal slippages.
• With public debt rising, the authorities need to continue fiscal adjustment policies to stabilize public debt over time and balance the adjustment with broader reforms to support growth.

An International Monetary Fund (IMF) team led by Geremia Palomba, IMF mission Chief for Namibia, visited Windhoek during February 24-28, to discuss recent developments and the economic outlook in the context of its regular surveillance activities.

At the end of the visit, Mr. Palomba issued the following statement:

“The economy is projected to return to positive growth this year. Real GDP contracted in 2019 and is expected to turn positive during 2020 as the impact of last year drought fades and mining production picks up. Absent structural reforms, growth would strengthen only gradually over the medium-term. Downside risks to this outlook include a decline in global growth as COVID-19 virus risks materialize, and possible lower-than-expected Southern African customs Union (SACU) revenue and fiscal slippages that would undermine the government’s effort to stabilize public debt dynamics.

“With public debt rising, the authorities need to continue fiscal adjustment policies to stabilize public debt over time and balance the adjustment with broader reforms to support growth. In preparation of the FY20/21 budget, the government’s medium-term fiscal adjustment plans and supporting policy measures should be clearly identified.

“There is a need to jumpstart structural reforms to reignite growth and boost job creation. It is important to improve the efficiency of the economy, including by streamlining business regulations, strengthening market operations of key public enterprises, removing obstacles that contribute to high electricity and transportation costs, and better align wage dynamics in the public sector and in the economy to productivity trends. Over time, it is important to remove obstacles to exports and address shortages of skilled workers.

“The financial sector remains sound despite weak growth having started to negatively affect banks’ performance. Reforms to improve the non-bank regulatory and supervisory framework are advancing, although at a slow pace.

“The 2020 Article IV consultation—annual review of the economy—with Namibia is planned to take place before the end of the year. 

“The mission thanks the authorities and other counterparts for their hospitality and productive discussions.’’