The prolonged recession that has gripped the domestic economy for the better part of the last three to four years is expected to be something of the past, as the International Monetary Fund (IMF) on Monday projected that Namibia will see positive growth in 2020 as the drought fades and mining production picks ramps up. In a statement, IMF mission chief for Namibia Geremia Palomba said absent structural reforms and growth would strengthen gradually over the medium-term.
“Downside risks to this outlook include a decline in global growth as COVID-19-virus risks materialise and possible lower-than-expected Southern African Customs Union (SACU) revenue and fiscal slippages. With public debt rising, the authorities need to continue fiscal adjustment policies to stabilise public debt over time and balance the adjustment with broader reforms to support growth,” read the IMF’s statement.
The IMF team, led by Palomba, visited Windhoek from 24 to 28 February to discuss recent developments and the economic outlook in the context of its regular surveillance activities.
Palomba said “The economy is projected to return to positive growth this year. Real GDP contracted in 2019 and is expected to turn positive during 2020 as the impact of last year drought fades and mining production picks up”.
Palomba stated that with public debt rising, the authorities need to continue fiscal adjustment policies to stabilise public debt over time and balance the adjustment with broader reforms to support growth. He further recommended that in preparation of the FY20/21 budget, the government’s medium-term fiscal adjustment plans and supporting policy measures should be clearly identified.
“There is a need to jumpstart structural reforms to reignite growth and boost job creation. It is important to improve the efficiency of the economy, including by streamlining business regulations, strengthening market operations of key public enterprises, removing obstacles that contribute to high electricity and transportation costs, and better align wage dynamics in the public sector and in the economy to productivity trends. Over time, it is important to remove obstacles to exports and address shortages of skilled workers,” said the IMF mission chief for Namibia.
Palomba pointed out that the country’s financial sector remains sound despite weak growth starting to negatively affect the performance of banks. He also noted that reforms to improve the non-bank regulatory and supervisory framework are advancing, although at a slow pace.
The IMF’s 2020 Article IV consultation, which is an annual review of the domestic economy, is scheduled to take place before the end of the year.
2020-03-04 07:39:39 | 4 months ago