IMF Staff Completes 2016 Article IV Mission to Namibia
An International Monetary Fund (IMF) staff team led by Mr. Geremia Palomba, IMF Mission Chief for Namibia, visited Windhoek during September 8-21, 2016 to conduct the 2016 Article IV Consultation discussions with Namibia.
At the conclusion of the visit, Mr. Palomba made the following statement:
“After years of strong performance, growth is expected to temporarily slowdown in 2016. The IMF projects 2016 growth at 2.5 percent, compared to 5.3 in 2015, as the government starts consolidating and construction activity slows down. The performance is expected to accelerate to above 5 percent in 2017 and 2018 as production from new mines rumps up. Risks to this outlook are tilted to the downside and include volatile Southern African Customs Union (SACU) revenue, further commodity price declines, and possible sovereign debt credit downgrades.
“Namibia’s key challenges going forward are to preserve macroeconomic stability, and make inroads in reducing high unemployment and income inequality. The government and the Bank of Namibia have already taken steps to counter declining SACU revenue and rising inflation. However, fiscal and external vulnerabilities are rising and additional actions are required.
“In light of the macroeconomic outlook, fiscal adjustment anchored in a credible medium-term plan is essential to preserve macroeconomic stability and debt sustainability. Policies need to be carefully designed to avoid pressuring the economy, while safeguarding critical social and development spending. Strengthening revenue administration, improving spending efficiency and the management of State Owned Enterprises (SOEs) would help to reduce the impact of the adjustment. To this end, the mission welcomes the authorities’ commitment to undertake additional actions to preserve debt sustainability while containing the impact on growth in the context of the upcoming Mid-Year Budget Review Policy Statement.
“The financial sector remains sound and the authorities are taking steps to curb possible risks and advance key financial sector reforms. Further macroprudential measures and heightened monitoring and supervision of financial sector risks is warranted given fast growing real estate prices, relatively high private debt, and complex and extensive linkages across financial institutions.
“The government is taking actions on various fronts to tackle high unemployment, particularly among the youth, and reduce income inequality. A well-focused package of structural reforms to address the lack of skilled workers, improve the employability of the less skilled labor force, and to simplify business regulations has the potential to significantly boost employment. Focusing reform efforts in this direction appears the most promising way to deliver more inclusive growth.
“The mission met with Prime Minister Saara Kuugongelwa-Amadhila, Minister of Finance Calle Schlettwein, Bank of Namibia Governor Iipumbu Shiimi, other senior officials, and financial market, business and union representatives. The mission would like to express its gratitude to the authorities and their staff for the productive and open discussions.”