Africa-Press – Namibia. THE International Monetary Fund (IMF) has again called on the government to continue cutting expenditure, to rein in ever increasing debt and not allow it to become unsustainable.
THE International Monetary Fund (IMF) has again called on the government to continue cutting expenditure, to rein in ever increasing debt and not allow it to become unsustainable. This was said by the fund yesterday after concluding its Article IV consultations on the country.
These consultations are aimed at assessing economic and financial developments, and discussing the country’s economic and financial policies with government and central bank officials. The IMF staff missions also often meet with parliamentarians and representatives of business, labour unions, and civil society.
At the conclusion of the consultations, the IMF lead mission chief, Giorgia Albertin, said the country needs to continue implementing the fiscal consolidation strategy, as it is crucial to preserve debt sustainability.
Namibia’s debt level is expected to reach a whopping N$140 billion by the end of this fiscal year, and borrowing over the last months has increased, with millions in excess being swept off the market.
Albertin said this consolidation has to allow growth and not cut away expenditure from the most vulnerable sectors of the local economy. She emphasised that the state needs to continue “containing the wage bill, advancing the reform of state-owned enterprises, and strengthening tax administration”.
If left unattended, Albertin said high debt levels with limited economic growth could be detrimental to the country, and the only exit from this undesirable state of the economy is through a well thought through fiscal consolidation, to return the country to some stability.
“This consolidation should not go in the way of provision of necessary services, and the wage bill, containing earning items such as travel allowances, could assist in taming the bill,” said the Italian economist.
The IMF said preserving macroeconomic stability, advancing structural reforms and protecting the most vulnerable are key to fostering private sector-led and inclusive growth and reducing unemployment and inequality.
“In parallel, it is important to preserve social spending and growth-supporting public investment and mitigate the impact of higher food and fuel prices on the poorest. Strengthening the public financial framework will support fiscal consolidation,” said the fund.
Other mentioned items include a note to the Bank of Namibia that as inflationary pressures rise, maintaining the policy rate broadly aligned with the South African Reserve Bank’s rate and an adequate level of reserves will support the currency peg and anchor inflation.
“Strengthening the resilience of the financial sector and managing macro-financial risks will support financial stability.”
Albertin noted that by maintaining the one-to-one peg with the South African rand, Namibia has been saved from a much higher inflation rate, which would have shattered the economy.
Other notes are that there is a need to conduct structural reforms to support economic diversification and enhance productivity. “Improving the business climate, fostering access to finance, strengthening governance, and reducing skills mismatches is key to foster growth,” said the fund.
The fund expects Namibia’s economy to grow by 3% in 2022 and 3,2% in 2023. The full consultations report would be released in due course. Email: [email protected] Twitter: @Lasarus_A This was said by the fund yesterday after concluding its Article IV consultations on the country.
These consultations are aimed at assessing economic and financial developments, and discussing the country’s economic and financial policies with government and central bank officials. The IMF staff missions also often meet with parliamentarians and representatives of business, labour unions, and civil society.
At the conclusion of the consultations, the IMF lead mission chief, Giorgia Albertin, said the country needs to continue implementing the fiscal consolidation strategy, as it is crucial to preserve debt sustainability.
Namibia’s debt level is expected to reach a whopping N$140 billion by the end of this fiscal year, and borrowing over the last months has increased, with millions in excess being swept off the market.
Albertin said this consolidation has to allow growth and not cut away expenditure from the most vulnerable sectors of the local economy. She emphasised that the state needs to continue “containing the wage bill, advancing the reform of state-owned enterprises, and strengthening tax administration”.
If left unattended, Albertin said high debt levels with limited economic growth could be detrimental to the country, and the only exit from this undesirable state of the economy is through a well thought through fiscal consolidation, to return the country to some stability.
“This consolidation should not go in the way of provision of necessary services, and the wage bill, containing earning items such as travel allowances, could assist in taming the bill,” said the Italian economist.
The IMF said preserving macroeconomic stability, advancing structural reforms and protecting the most vulnerable are key to fostering private sector-led and inclusive growth and reducing unemployment and inequality.
“In parallel, it is important to preserve social spending and growth-supporting public investment and mitigate the impact of higher food and fuel prices on the poorest. Strengthening the public financial framework will support fiscal consolidation,” said the fund.
Other mentioned items include a note to the Bank of Namibia that as inflationary pressures rise, maintaining the policy rate broadly aligned with the South African Reserve Bank’s rate and an adequate level of reserves will support the currency peg and anchor inflation.
“Strengthening the resilience of the financial sector and managing macro-financial risks will support financial stability.”
Albertin noted that by maintaining the one-to-one peg with the South African rand, Namibia has been saved from a much higher inflation rate, which would have shattered the economy.
Other notes are that there is a need to conduct structural reforms to support economic diversification and enhance productivity. “Improving the business climate, fostering access to finance, strengthening governance, and reducing skills mismatches is key to foster growth,” said the fund. The fund expects Namibia’s economy to grow by 3% in 2022 and 3,2% in 2023. The full consultations report would be released in due course.
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