Bank of Namibia (BoN) Governor Johannes !Gawaxab is concerned about the reluctance of people in receiving the Covid-19 vaccination, saying the vaccines is the weapon to achieve a faster economic recovery. He made these remarks yesterday when BoN met the Parliamentary Standing Committee on Economics and Public Administration. 

!Gawaxab said the delay in vaccine roll-out will delay the number of tourists coming to Namibia and will also hinder businesses to be fully operational to help revive the domestic economy. Overall, real gross domestic product (GDP) contracted by 8% in 2020 and is expected to recover marginally by 2.7% in 2021.

Concerned with the Southern African Customs Union (SACU) revenue reduction for Namibia, the BoN governor advised government to focus on numerous revenue streams while doing the best to reduce expenditure. 

For the financial year 2021/22, !Gawaxab stated that Namibia’s share of the SACU receipts will decline by about 34% to N$14.8 billion, down from N$22.3 billion in 2020/21. 

“The SACU decline was underpinned by the collapse in imports into SACU and mainly imports into South Africa, which fell to 2012 levels and import duty collections were estimated to be as bad as in the worst year after the global financial crisis – in the worst year (2010),” he explained.

Meanwhile, the central government budget deficit for the fiscal year 2020/21 widened to 9.5% of GDP, lower than the 10.4% earlier estimate in the October 2020 mid-year budget review. The downward revision was attributed to an upward adjustment in revenue due to better government revenue collection than forecasted.

However, when compared to the previous fiscal year, the deficit-to-GDP ratio rose significantly, making it the highest deficit ever registered in Namibia. This was attributed to the government’s commitment to reduce the impact of Covid-19 on economic activity and the negative impact of the pandemic on tax revenue.

The domestic economy contractions were observed across all three industries – primary, secondary and tertiary – and the expected growth is underpinned by broad-based base effects as well as better growth prospects in sectors such as diamond mining, agriculture and transport.

Furthermore, the governor noted that given weak demand in
the domestic economy and despite relief measures to
households and businesses by means of establishing a more favourable credit environment, the uptake of new credit remained subdued as expected in any economic and/or financial crisis.  Consumers and businesses remained hesitant to borrow or undertake new investments, given the uncertainty. - mndjavera@nepc.com.na