Borrowing to stimulate growth – Geingob … President allays fear of debt trap
WINDHOEK – Namibia breaking her self-imposed public debt cap of 36 percent to reach the current 43.3 percent was necessary to help stimulate economic growth and create jobs in the country, President Hage Geingob said yesterday.
He made the remarks at State House while briefing the nation about his visits to China and Indonesia where commitments ranging from investment to borrowing were made.
Although public debt has hit the 43.3 percent mark – unprecedented in the eyes of some – Geingob says this was necessary to awaken the economy out of its slumber.
It was confirmed last week that the Forum on China–Africa Cooperation (FOCAC), which President Geingob attended with other African leaders, served as a platform for China and Namibia to put the final touches to what would see the former providing funding for the expansion of Hosea Kutako International Airport in Windhoek.
This funding, plus a loan acquired from the African Development Bank, alarmed many people who believe the country would find itself in a situation where it would not be able to honour its obligations towards lenders.
Geingob, flanked by his Cabinet ministers including Calle Schlettwein of finance, said each one of government’s borrowed cents would be invested productively to help stimulate growth.
“We’re not borrowing to pay salaries or fund operational expenditures,” he told a congregation of reporters at State House.
“We’re borrowing to fund projects that ensure creating new jobs and sustaining existing ones. There are many lay-offs of workers and we need to do something,” he added.
The head of state said there was a “crisis” that warranted compromising the national debt cap of 36 percent.
“Initially, President [Sam] Nujoma and I [as Prime Minister] just decided, arbitrarily, that no money would be borrowed from the World Bank or IMF. So from that point of view, our debt has always been [under control],” he explained.
“If you take the SADC average debt, it’s about 60 percent of GDP. For so long we kept ours at 36 percent but at the moment we have problems – we have a crisis and that’s why we’re opening up.”
“We are keeping our debt at 43 percent, which is still very below the SADC average. True, to finance debts is not an easy thing but if you do scholarly research you’d find that 43 percent is not the worst. We must manage it.”
China’s lending of money to Africa, mostly for infrastructural development, has attracted negative attention especially after Beijing last week committed US$60 billion to African development through a variety of payback financial arrangements.
The criticism thundered mostly in the Western countries engaged in trade and investment wars with China, but Geingob, speaking at FOCAC, said the China-Africa cooperation was mutually beneficial and at a point of no return.
Yesterday he said picking on the Chinese was selective and often misplaced.
“There are good Chinese and bad Chinese just as there are good Namibians and bad ones,” he said.
“Let your laws take their course. If the Chinese come here and use workers from their own country, then I think it’s our own fault. We have to put up clearly-stated conditions. The good thing is that we can choose and pick whoever we want to enter into deals with.”
2018-09-11 09:09:09 8 months ago