Press Release No. 25/055

IMF Staff Completes 2025 Article IV Mission to Namibia

March 7, 2025

• Namibia’s real GDP is estimated to have grown by 3.5 percent in 2024. The 2023/24 drought depressed agricultural production, causing wide-spread food insecurity and highlighting the importance of climate change adaptation. Growth is expected to recover to 4.0 percent in 2025.
• Fostering conditions to promote job growth is an important priority. Given already high public sector employment, job creation will need to be driven primarily by the private sector. This calls for improvements in the business climate, as well as tax and regulatory stability.
• Oil and gas exploration raise the prospect of boosting national income. To ensure that growth is broad based and inclusive, policies that address skill gaps and improve critical infrastructure are essential.

Windhoek, Namibia: An International Monetary Fund (IMF) staff team, led by Mr. Jaroslaw Wieczorek, visited Windhoek during February 25‒March 10, 2025, to conduct discussions for the 2025 Article IV Consultation with Namibia.

At the conclusion of the mission, Mr. Wieczorek made the following statement.

“Namibia's real GDP growth is estimated to have slowed to 3.5 percent in 2024 due to weak global demand for diamonds and a sharp contraction in agriculture. Growth is projected to accelerate to 4.0 percent in 2025, as agriculture recovers, and is expected to average about 3 percent over the medium term.   

“Unemployment, reported at 36.9 percent in the latest (2023) labor force survey, remains a major challenge, underpinning the authorities’ strengthened focus on job creation.

“Nearly half of Namibia’s population faced high levels of acute food insecurity during the recent drought. While conditions are expected to improve in 2025, public support for those who continue to experience food insecurity should continue. Government programs to increase resilience against climate shocks, which have become more frequent and intense in recent years, remain vital.

“Inflation has eased below the midpoint of the central bank’s target range (3–6 percent), reflecting a moderation in the growth of food and transport prices and it is expected to remain at about 4 percent in 2025. This outlook, however, remains subject to external price shocks.

“As inflation normalized, the Bank of Namibia (BoN) lowered its policy rate by a cumulative 100 bps in four steps between July 2024 and February 2025. While credit rebounded in the last quarter of 2024, it remains subdued (growing at 4.1 percent year-on-year as of January 2025).

“The external current account deficit increased from 14.8 percent of GDP in 2023 to an estimated 16.0 percent of GDP in 2024, due to a slump in diamond prices and increased demand for consumer goods imports. The current account deficit is expected to remain high as oil and gas exploration-related imports (which are largely financed by FDI in these sectors) remain robust. Gross international reserves covered 4.5 months of imports in 2024. Reserves are expected to stay above 3 months of imports in 2025, with the planned repayment of the Eurobond reducing their level and rebound gradually in the medium term.

“The fiscal deficit is expected to widen from 2.4 percent of GDP in FY23/24 to 3.0 percent of GDP in FY24/25. The public wage bill increase, higher drought relief, and capital expenditure are projected to more than offset higher revenues, reflecting record-high SACU transfers and strong domestic tax collection.

“Going forward, maintaining fiscal discipline is crucial to keep a balance between supporting growth and job creation and ensuring that public debt remains sustainable. The volatility of Southern African Customs Union (SACU) revenues and a sharp decline in revenues from the diamond sector underscore the need for a prudent management of fiscal resources.

“Key fiscal measures include exercising restraint over the wage bill and calibrating capital spending to ensure a primary surplus in FY2025/26, as envisaged in the recent medium-term expenditure framework. Implementing a comprehensive civil service reform accompanied by digitalization would facilitate fiscal consolidation and enhance service delivery. Raising the efficiency of public investment and focusing it on addressing key infrastructure gaps (energy, transport, and water) would improve growth prospects and foster resilience and job creation.

“To support economic growth, the BoN has maintained its policy rate at 50–75 bps below the policy rate set by the South African Reserve Bank (SARB), while indicating its intention to close the rate differential over the medium-term. Given heightened global policy uncertainty, the BoN should stand ready to reduce the interest rate differential earlier—if warranted by macroeconomic conditions—to safeguard the currency peg and ensure adequate reserve coverage.

“Continued enhancement of the macroprudential toolkit is key for strengthening the capacity to monitor macro-financial risks and safeguard financial stability. Efforts to expedite Namibia’s exit from the Financial Action Task Force (FATF) Grey List should continue.

“Broader structural reforms are vital to support private sector-led growth and inclusion. Reducing the cost of doing business through streamlining visa processes, reducing regulatory barriers to starting a business, and liberalizing land use policies can foster a dynamic private sector. Strengthening social protection and implementing active labor market policies are essential to reduce unemployment and inequality.

“The mission thanks the authorities for their excellent collaboration and warm hospitality.”