Press Release: Statement at the Conclusion of an IMF Article IV Mission to Namibia
May 26, 2010Press Release No. 10/214
May 26, 2010
An International Monetary Fund (IMF) mission led by Norbert Toé visited Windhoek during May 12–26 for the annual Article IV Consultation with Namibia. The mission’s work focused on reviewing recent economic and financial developments and policies needed to restore fiscal sustainability in the aftermath of the global economic downturn. Policies to preserve macroeconomic and financial stability and to broaden economic growth were also discussed. The mission met with the Right Honorable Prime Minister Nahas Angula, Minister of Finance Hon. Saara Kuugongelwa-Amadhila, Central Bank Governor Iipumbu Shiimi, other senior government officials, members of the donor community, and representatives of the private sector and civil society.
At the end of the mission, Mr. Toé, Mission Chief for Namibia, issued the following statement:
“Namibia has been adversely affected by the global crisis, but managed to limit its impact on the economy. Economic activity is estimated to have contracted by 0.8 percent in 2009, after an average annual increase of 5.5 percent in 2006–08. Inflation declined marginally to 9 percent in 2009, reflecting the decline in international food and fuel prices, but fell further to 5 percent at end-April 2010. The impact of the global crisis on Namibia’s growth was limited thanks to the policies implemented by the government to support economic activity using the reserves accumulated during the previous three years of strong fiscal performance. However, because of the increased spending and a decrease in government revenue brought about by weak economic activity, the fiscal balance shifted into a deficit representing 2.8 percent of gross domestic product (GDP) in the 2009/10 fiscal year (April 1–March 31).
“Growth is expected to recover in 2010 from last year’s slump and gather momentum, driven by a rebound in the mining sector as the world economy picks up, and an improvement in the manufacturing and services sectors. Reflecting an expected significant drop in revenue from the Southern African Customs Union this financial year and next, the fiscal position is projected to deteriorate sharply in 2010/11 and 2011/12, exceeding 8 percent of GDP annually. The mission welcomes the fiscal consolidation embodied in the government’s medium-term expenditure framework tabled before parliament in March 2010, but encourages the government to embark on a more ambitious fiscal consolidation path that would reduce prospective fiscal deficits to levels consistent with keeping public debt sustainable over the medium term.
“The banking sector has weathered the global financial crisis well; banking institutions are well capitalized and profitable. However, nonbank financial institutions (NBFIs) need close supervision to avert vulnerability to the financial system going forward. In this context, the mission welcomed the adoption of the Financial Institutions and Market Bill and the strengthening of the regulatory and supervisory framework of NBFIs. It encourages the government to expedite the enactment of pending bills and strengthen the Namibia Financial Institutions Supervisory Authority.
“Upon its return to Washington, the mission will prepare a report, which could be considered by the IMF's Executive Board around the end of July 2010.
“The mission is grateful to the authorities for their warm hospitality and the collegial and constructive tone of the discussions.”