• IMF flags slowing growth and rising fiscal pressures in Namibia

• Public finances strained by lower SACU revenues and rising debt

• Fund calls for faster structural reforms to boost investment and jobs

The International Monetary Fund has urged Namibia to accelerate structural reforms, following its 2026 Article IV consultation mission conducted from March 16 to 20.

In a statement released on March 27, the IMF said the country’s economy is losing momentum, facing both internal vulnerabilities and a challenging global environment.

Preliminary findings from the mission, led by IMF economist Xiangming Li, show that real GDP growth slowed to 1.7% in 2025. The slowdown was driven in part by weaker global demand for diamonds and efforts to rebuild livestock after losses caused by the 2024 drought. The trend is expected to continue in 2026, amid geopolitical tensions—particularly in the Middle East—that are pushing up energy costs and weighing on global demand.

On the external front, conditions have improved slightly. The IMF noted that the current account deficit is expected to remain significant, largely due to imports linked to foreign direct investment in oil exploration and mining. Foreign exchange reserves declined after Namibia repaid its $750 million eurobond in October 2025, leaving import cover at about 3.5 months by the end of the year.

Public finances remain a key concern. The budget deficit widened in the 2025/2026 fiscal year, mainly due to a sharp drop in revenues from the Southern African Customs Union (SACU). Despite efforts to contain spending, including the wage bill and subsidies, public debt is expected to continue rising over the medium term.

Namibia has been pursuing macroeconomic reforms in recent years to stabilize its economy. In March 2025, the government presented a national budget of 106.3 billion Namibian dollars—about $6 billion—for the 2025/2026 fiscal year, up 6.19% from the previous year. The budget prioritizes economic development, security, infrastructure, and social protection.

The government has also signed a partnership agreement with the World Bank covering the 2025–2029 period, aimed at reducing inequality and promoting sustainable, resilient growth. The program focuses on job creation and improving access to public services, in line with Namibia’s Vision 2030.

Against this backdrop, the IMF is calling for stronger fiscal consolidation, including tighter control of current spending, reform of the public service medical aid scheme (PSEMAS), and reduced transfers to state-owned enterprises. It also stressed the need to strengthen public financial management, particularly procurement processes.

Beyond macroeconomic adjustments, the IMF emphasized the urgency of structural reforms. Improving the business climate, speeding up administrative procedures, and implementing local content policies are seen as key to attracting private investment. Expanding digital infrastructure and aligning education systems with labor market needs are also critical to supporting job creation and economic diversification.

According to World Bank forecasts, Namibia’s GDP growth is expected to rise from 3.7% in 2025 to 3.9% in 2026.

Carelle Yourann (intern)