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Namibia exceeds interest payment benchmark

2021-11-10  Maihapa Ndjavera

Namibia exceeds interest payment benchmark
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Namibia’s interest payments on debt as a percentage of revenue increased from 11.9% to 13.2% in the 2020/21 financial year. 

The current level of interest payments exceeded the statutory benchmark of 3.9% of gross domestic product (GDP), and 10% of the revenue set out in the Debt Management Strategy 2018-2025. 

This information was revealed by Iipumbu Shiimi minister of finance during last week’s mid–year budget review for the FY2021/22 and fiscal policy statement FY2022/23 to FY2024/25 Medium Term Expenditure Framework (MTEF) in the National Assembly. 

The finance minister also noted that government guarantees increased from 6.3% of GDP in FY2019/20 to 7.1% of GDP in FY2020/21. 

“The increase in interest payments is due to significant increase in borrowing to fund the budget deficit, resulting from the outbreak of Covid-19,” stated Shiimi.

According to him, total revenue and grants for FY2020/21 is recorded at N$57.8 billion, representing a decrease of 1%, compared to N$58.4 billion realised in FY2019/120. 

“The decrease in revenue was recorded in the main tax categories of income tax on individuals that decreased by 2.7%, value added tax (VAT) fell by 24.9%, other taxes on income and profits shrank by 23.2%, withholding tax on interest decreases by 18.1%, while other taxes income category fell by 10.6%. The only income category which showed strong growth was the taxes on international trade and transactions (SACU),” indicated Shiimi.

He further noted that total expenditure was recorded at N$72.0 billion for FY2020/21, representing an increase of 7%, compared to FY2019/20. 

The increase in expenditure arose mainly from increases in goods and other services category, which increased by 30.3%, compared to the previous year, mainly due to high spending needs to fund Covid-19-related activities.  Personnel expenditure remained relatively stagnant, growing by merely 0.3%, while development expenditure increased marginally by about 0.08%, compared to 2019/20. 

Given a decrease in revenue and increase in expenditure, the budget deficit increased from 5% to 8%, while the country’s total debt stock rose from N$100.4 billion in FY2019/20 to N$110.6 billion in FY2020/21. 

As a percentage of GDP, total debt increased from 56% to 62.1%. 

- mndjavera@nepc.com.na


2021-11-10  Maihapa Ndjavera

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