Govt failed to adhere to public debt target

Namibia’s public debt expectations for the current financial year (FY) doubled to 69.6% of gross domestic product (GDP) as it failed to adhere to its own public debt target of 35% of GDP set in the 2012/13 financial year (FY).According to the Institute of Public Policy Research (IPPR) Quarterly report, Namibia finds itself in a situation where public debt has reached levels government never foresaw. “This is primarily because it has always been easier to borrow more than make painful decisions on cutting spending.”IPPR has urged the Ministry of Finance, with the Bank of Namibia (BoN) and the National Planning Commission (NPC), to ensure that it has an accurate and comprehensive picture of all public debt and approval for any loan must be centralised.This may already be the case but as an outsider it is hard to assess fully as there is no publicly available database on public loans or loan guarantees. A comprehensive and detailed account of Namibia’s public debt should be published as part of the national budget, IPPR pointed out.This will serve to reassure both the general public and the local and international investor community. The Ministry of Finance must also develop the capacity to carry out debt sustainability analyses on a regular basis, preferably before agreements on any new loans are entered into, the report reads.The budget for the financial year 2023/24 is expected to be tabled in parliament by finance minister Ipumbu Shiimi on 22 February 2023.LoansIPPR says Namibians have been used to hearing from their ministers of finance about the need for fiscal belt-tightening and the importance of reducing the ratio of debt-to-GDP. Paradoxically this goes hand in hand with Government continuing to sign ever bigger agreements for more debt.Some examples include an African Development Bank (AfDB) project financing loan, amounting to N$4 billion over two years announced in the FY18/19 budget statement to fund agricultural mechanisation, road and rail infrastructure and schools renovation programme under the Economic Governance and Competitiveness Support Programme.Secondly, a loan from KfW amounting to some N$590 million (EUR40 million) for water infrastructure development announced in the FY18/19 Budget Statement.In addition, on 31 March 2021, the International Monetary Fund (IMF) approved a loan of US$270.83 million to Namibia under the Rapid Financing Instrument (RFI) to address urgent balance of payment and fiscal financing needs stemming from the Covid pandemic.Furthermore, on 29 September 2022, the AfDB formally approved a loan to Namibia amounting to ZAR2.3 billion (US$134.9 million) in co-financing for the second phase of Namibia’s Governance and Economic Recovery Support Program (GERSP II).Lastly, on 16 November 2022, Namibia signed a Joint Declaration for a potential loan of up to EUR500 million for renewable hydrogen and renewable energy investments from the European Investment Bank (EIB) at the margins of the COP27 meeting in Egypt.-phillep@nmh.com.na

Govt failed to adhere to public debt target

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Govt failed to adhere to public debt target

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