Simonis Storm (SS), a local financial firm, has commented after Tuesday’s Mid-Term Budget Review that the domestic fiscal outlook is credible but conservative. The firm expects mildly expansionary fiscal stance through 2026, balancing electoral and economic imperatives, followed by a firmer consolidation path thereafter. 

The SS comments come after finance minister Ericah Shafuda reallocated some N$1.2 billion during the Mid-Term Budget Review on Tuesday, and managed to keep the overall Appropriation Amendment Bill for 2025/26 unchanged at N$89.4 billion, illustrating a commitment to fiscal discipline. 

However, within the existing budget framework, Shafudah increased the operational budget to a total of N$80.6 billion, while the development budget has decreased from N$9.6 billion to N$8.8 billion, representing a 9.38% reduction. Debt servicing cost has been revised upwards from N$13.7 billion (14.8% of revenue) to N$14.3 billion (16.1% of revenue).

According to SS, this sequencing is rational as expansionary spending in the near-term supports confidence and growth, while the gradual return to consolidation post-2026 ensures medium-term sustainability. 

“Namibia’s fiscal framework thus represents a measured balancing act stabilising debt without stifling growth, investing in social priorities while maintaining fiscal discipline, and strengthening institutions to improve efficiency. The policy challenge ahead lies not in ambition but in implementation: sustaining discipline beyond the electoral cycle and ensuring that the current wave of digital and fiscal reforms translates into tangible improvements in service delivery, investor confidence, and long-term economic resilience,” states the SS analysis of the mid-term budget.  

SS added that Shafuda’s reallocation reflects a conscious effort to prioritise continuity of essential services over expansionary outlays. SS further pointed out that compared to neighbouring peers, Namibia’s fiscal stance is notably more conservative compared to South Africa, for example, has expanded spending by over 9% year-on-year to stabilise state-owned enterprises, while Botswana has pursued counter-cyclical spending in infrastructure. 

“Namibia, by contrast, is pursuing stability and debt containment, a prudent move given limited fiscal buffers. In effect, Namibia’s policy mix has entered a transitional phase from the post-Covid expansionary stance that prioritised economic relief to one that emphasises consolidation and fiscal credibility,” states the SS analysis of the mid-term budget. 

The firm also commented on total domestic revenue collection, which by end of September 2025 stood at N$36.6 billion, equivalent to 40% of the annual target, compared to 43% during the same period in 2024.

“This shortfall exposes persistent structural fragilities in the revenue system. Namibia’s dependence on SACU transfers which typically contribute 30 to 35% of total revenue, leaves it vulnerable to regional trade slowdowns. VAT and income-tax receipts have also underperformed due to weaker import volumes and a sluggish corporate environment, while VAT refunds, especially to exporters and oil exploration companies, have risen. 

These factors together have eroded tax buoyancy, reducing the responsiveness of revenue growth to nominal GDP,” states the SS analysis of the mid-term budget. 

The firms continued that from a comparative perspective, Namibia’s revenue effort (at roughly 31% of GDP) remains above the Sub-Saharan African average of 21%, “but its composition is heavily weighted toward volatile sources rather than broad-based domestic taxation”.

Also commenting on the mid-term budget, John Steytler, founder and managing director of R&J Steytler Management Consultants, stated that government has shifted its attention to the things that touch people’s lives most directly, namely education and health. 

“That’s good news for students, teachers, doctors, and nurses,” said Steytler. 

The former Presidential Economic Advisor also commented specifically on the N$814 million for the education ministry to fund the initial stages free tertiary education and to recruit more than 660 teachers: “For many Namibian families, this is more than a budget number, it’s an opportunity for their children to learn, grow, and build better futures”. 

He further welcomed the additional allocation of N$185 million to the health ministry to recruit more than 1 500 health workers. “In a country where hospitals and clinics are often stretched thin, that’s a welcome move. It means more nurses, more doctors, and better service for ordinary citizens”, said Steytler.

However, Steytler cautioned that not everything is rosy as Namibia’s debt servicing bill, the amount the country spends paying back what it owes, has climbed to N$14.3 billion, now gobbling up 16.1% of government revenue.

“That’s more than what the country is spending on building new infrastructure. It’s a clear reminder that debt is not free money; what we borrow today, our children must repay tomorrow. Still, there’s discipline in how the government is managing this pressure. Instead of increasing the total budget or deficit, it’s reallocating funds within what it already has. That’s a smart, cautious move in a tough global economy”, Steytler commented. 

He added that while the mid-year review doesn’t bring new money, it does bring new direction.

“It’s a message of discipline with compassion: cutting where spending underperforms, and reinvesting where it truly matters. Namibia’s future won’t be built on bigger budgets alone, but on better choices about where our money goes. And this time, those choices are clearly about people: the student, the teacher, the nurse, the patient. When a nation spends wisely on its people, it invests in its most powerful form of growth; human potential”, Steytler concluded.