## 1. Selected Economic Indicators, 2019–2028 ## Source details **Canonical URL:** [1. Selected Economic Indicators, 2019–2028](https://www.imf.org/-/media/files/publications/cr/2023/english/1namea2023002.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2023/english/1namea2023002.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2023/english/1namea2023002.pdf.json) --- ### Context and background - Progress and structural features - Since independence, Namibia improved living standards and maintained macroeconomic stability. - Social safety net expansion helped halve poverty and reduce elevated inequality. - Human Capital Index (HCI), Global Gender Gap and Rule of Law improved above the regional average. - Economic model limits: mineral dependence and public sector dominance constrained diversification. - Public wage bill rose from 37.7 percent of revenue in 2009 to over 50 percent in 2022. - Public debt-to-GDP ratio reached nearly 69 percent of GDP in FY22/23. - Structural opportunities - Abundant wind and solar resources supporting green hydrogen interest. - Lithium and rare earth deposits attracting investor interest. - Promising offshore petroleum discoveries could make Namibia a significant oil producer. ### Recent developments (selected indicators) - Real GDP growth - 2021: 3.5 percent - 2022: 4.6 percent (driven by diamonds and uranium) - H1-2023: accelerated recovery propelled by mining; agricultural output contracted during drought; growth excluding mining turned negative in Q2-2023. - Labor market and inflation - Unemployment: 21 percent overall; 40 percent among youth. - Headline inflation: peaked at 7.3 percent (y/y) in August 2022; 4.5 percent (y/y) in July 2023. - Core inflation: remained below 5 percent; inflation expectations returned to the target range of 3–6 percent. - Food price inflation: exceeded 10 percent for nearly one year; vulnerable households may spend as much as 65 percent of income on food. - External sector (2022) - Current account deficit: 12.8 percent of GDP (2022) vs 9.9 percent of GDP (2021); CA gap of 3.9 percent of GDP. - Gross reserves: US$2.8 billion at end-2022, ensuring 4.5 months of import cover; reserves in September 2023: 4.7 months of imports. - Real effective exchange rate: depreciated by 3.6 percent in 2022 (average y/y); rand depreciated by 11.2 percent against the U.S. dollar (average y/y). - Fiscal performance (FY22/23) - Fiscal deficit narrowed from 8.6 percent of GDP in FY21/22 to 5.3 percent of GDP in FY22/23. - Revenues rose by 1.2 percentage points of GDP due to one-off SOE dividends, higher mineral royalties, and higher VAT; SACU receipts dropped by 1.1 percent of GDP. - Expenditures declined by 2.2 percentage points of GDP. - Wage bill: controlled via natural attrition, hiring limits, and below-inflation salary adjustments. - Monetary and financial sector - BoN repo rate: raised by 400 basis points since February 2022 to 7.75 percent; maintained a 50 bps differential below SARB. - Banks: liquid, well-capitalized, and profitable (ROA and ROE improved); NPL ratio: 5.5 percent at end-June 2023 (below 6 percent supervisory point). - Credit growth to private sector: slowed to 4.2 percent (y/y) in 2022 from 7.1 percent (y/y) at end-2019. - Mortgage rates: rose by 400 bps since tightening began, to 12.5 percent at end-August 2023; half of bank lending is in real estate. ### Outlook and risks - Growth and inflation projections - Real GDP growth (excluding offshore oil-related activities): 2.7 percent in 2024. - Medium term growth (excluding potential offshore developments): average 2.6 percent. - Headline inflation: projected to ease to 6 percent in 2023 and drop below 5 percent starting in 2024. - External position and reserves - Current account deficit: projected to narrow to 10.7 percent of GDP in 2023. - International reserves: projected to exceed the minimum ARA threshold by 6.2–12.9 percent throughout the projection horizon. - Fiscal outlook (FY23/24) - Overall fiscal deficit expected to drop to 3.9 percent of GDP. - Primary balance expected to turn positive at 1.2 percent of GDP. - SACU revenues expected to recover by 3.7 percentage points of GDP based on a one-off adjustment. - Public expenditure expected to increase by 2.1 percentage points of GDP reflecting drought relief, student loans expansion, census costs, SOE support, and higher interest payments. - Risks (balanced) - Upside: oil, gas, critical minerals, and green hydrogen development could boost investment, growth, and jobs. - Downside: deterioration in South Africa, resurging inflation requiring tighter monetary policy, weaker credit growth, strained household balance sheets, delays in fiscal consolidation, premature expenditure commitments (e.g., Green Hydrogen Project), and global commodity demand shocks. ### Policy priorities and recommendations - Fiscal and institutional reforms - Implement fiscal reforms to preserve public debt sustainability (wage, SOE and tax administration reforms; PSEMAS rationalization). - Strengthen statistical capacity to record large mineral transactions; establish natural resource management framework. - Finalize and adopt amended State Finance Bill (PFM Bill). - Enhance upfront budget preparation, streamline Mid-Year Budget Review, and digitalize the budget process. - Strengthen appraisal and selection of large public projects and publish fiscal risk statements for large projects, PPPs, and SOE-underwritten projects (e.g., GHP). - Monetary and reserve management - Optimize functioning of the currency peg; review daily liquidity operations and CFMs to ensure policy (repo) rate is binding on banks’ cost of funds and short-term capital flows. - If yield differences persist/widen, consider closer alignment of policy rate with SARB to stem outflows and support reserves. - Financial sector resilience and inclusion - Strengthen macroprudential framework and use dynamic stress testing regularly. - Operationalize Emergency Liquidity Assistance (ELA) and Deposit Guarantee Scheme (DGS); finalize resolution policy framework. - Implement financial inclusion strategy, Catalytic First Loss Venture Fund (CFLV), and Credit Guarantee Scheme (CGS) to expand SME credit. - Proceed cautiously on CBDCs with a needs-based approach for retail and wholesale use. ### Ensuring fiscal sustainability while protecting the vulnerable - Authorities’ medium-term fiscal strategy - Anchored on gradual fiscal consolidation adopted in October 2020: wage, SOE and tax administration reforms; rationalization of PSEMAS. - Implementation progress - Tax administration and part of SOE reforms advanced; public wage reform and PSEMAS rationalization stalled. - Public wage bill declined from 16.7 percent of GDP in FY20/21 to 14.8 percent in FY22/23 via natural attrition, hiring limits, and below-inflation salary adjustments. - Mid-Year Budget Review (initiated October 31) projects deficit reduction by 1 percentage point of GDP in FY23/24; significant SACU rebound partly used for higher interest cost and additional expenses; remainder saved as precautionary buffer. - Official MTFF key entries (Percent of GDP; authorities' GDP projections in the 2023/24 MYBR) - 2022/23 Act.: Total Revenue and Grants 30.7; Revenue 30.6; SACU receipts 6.7; Grants 0.1; Total Expenditure 35.8; Personnel 14.8; Interest Payments 4.5; Primary Balance -0.7; Overall Balance -5.2. - 2023/24 MYBR Proj.: Total Revenue and Grants 34.0; Revenue 33.7; SACU receipts 10.5; Grants 0.3; Total Expenditure 38.2; Personnel 14.1; Interest Payments 5.1; Primary Balance 0.9; Overall Balance -4.2. - 2024/25 Proj.: Total Revenue and Grants 31.8; Revenue 31.5; SACU receipts 8.6; Grants 0.3; Total Expenditure 36.9; Personnel 13.3; Interest Payments 5.1; Primary Balance -0.1; Overall Balance -5.1. - 2025/26 Proj.: Total Revenue and Grants 30.4; Revenue 30.3; SACU receipts 7.6; Grants 0.1; Total Expenditure 34.4; Personnel 12.5; Interest Payments 4.9; Primary Balance 0.9; Overall Balance -4.0. - 2026/27 Proj.: Total Revenue and Grants 31.1; Revenue 31.0; SACU receipts 8.2; Grants 0.1; Total Expenditure 33.2; Personnel 11.8; Interest Payments 4.9; Primary Balance 2.9; Overall Balance -2.1. - MTFF envisages adjustment of about 2 percentage points of GDP in FY24/25–FY26/27 through public wage bill reform, PSEMAS rationalization, and cutting transfers to SOEs. - Staff baseline (less ambitious than MTFF): primary balance improving to a surplus of 1 percent of GDP by FY26/27 versus nearly 3 percent in MTFF. ### Baseline assumptions and public debt dynamics - Staff baseline wage assumptions: - (i) a full wage-inflation indexation in FY24/25 (2024 is an election year); - (ii) a one-time pause in wage adjustment FY25/26; - (iii) a full wage-inflation indexation thereafter. - Public debt projections (staff baseline) - Public debt-to-GDP ratio: projected to rise modestly to 66.7 percent of GDP in FY24/25; ease to 65.8 percent of GDP in FY28/29. - Vulnerabilities and scenarios - “Passive” scenario: continued wage indexation (including FY25/26) causes public debt-to-GDP ratio to drift up. - Elevated gross financing needs projected to remain above the 20-percent benchmark for EMs over the medium term. - Overall risk of debt distress: moderate (Annex III). ### Fiscal consolidation, revenue mobilization, and reform priorities - Revenue context - Domestic tax revenue (excluding SACU receipts): close to 20 percent of GDP (median tax-to-GDP ratio: 13 percent in SSA; 18 percent in other emerging economies). - Proposed tax measures (MYBR envisages broadly revenue-neutral tax relief) - (i) CIT rate reduction gradually to 30 percent; - (ii) PIT threshold increases; - (iii) tax incentives for youth apprenticeship. - Expenditure-side reforms - Comprehensive civil service reform to rein in spending and improve efficiency: public sector wage bill accounts for about 40 percent of public expenditures; public wage premium large relative to private sector. - Functional review of the civil service and incentive-compatible early retirement program recommended. - Finalize Public Asset Ownership Policy (PAOP) to guide SOE reform and increase transparency of subsidies and transfers. - Strengthen NamRA governance and operational oversight. - Raise additional revenues from natural resources: transparently auction fishing licenses (currently only 5 percent of fish quota auctioned); review mining fiscal regime to address thin capitalization and unlimited loss carryforward. ### Institutional PFM and fiscal risk management - Priority institutional reforms - Expedite completion and parliamentary submission of the amended State Finance Bill. - Further digitalize the budget process and strengthen project appraisal/selection using forthcoming C-PIMA. - Publish fiscal risk statement for large projects, PPPs, and SOE-underwritten projects (e.g., GHP). - Finalize beneficial ownership registries and publish report on execution of COVID-19 spending and beneficial ownership information. ### Social protection and food insecurity - Acute food insecurity - 22 percent of population experienced acute food insecurity in July–September 2023 due to drought and depleted low-income household food stocks. - Projected to increase to 26 percent in October 2023–March 2024. - Drought relief budgeted at 0.4 percent of GDP in the MYBR for food assistance. - Authorities recognize need to expand Conditional Basic Income Grant coverage for poorest facing food insecurity. ### Management of natural resources and sovereign wealth - Data and capacity needs - Need to track transactions associated with oil exploration; current partial information suggests oil exploration costs significant relative to GDP and only small part of offshore activity captured in official statistics. - Strengthen coordination among agencies to collect, validate, and record all relevant data. - Taxation and monitoring - Enhance NamRA’s capacity to assess tax obligations of mineral and petroleum companies; monitor current mining activity to assess future mineral revenue potential. - Sovereign wealth fund (Welwitschia Fund, WF) - WF should be integrated into the budget with accumulation and withdrawal rules anchored on a sustainable nonoil primary balance. - At current juncture, debt reduction should take precedence over asset accumulation. - Staff emphasized subscribing to the Extractive International Transparency Initiative (EITI) and strengthening anti-corruption mechanisms. ### Currency peg, monetary policy, and reserve considerations - Peg performance and interest parity - Peg delivered low inflation: 2-year average of 5.6 percent compared to 14.2 percent in SSA. - Policy rate: 50 basis points below SARB; BoN raised repo rate to 7.75 percent (October 25, 2023 MPC decision). - Government bond yields in Namibia are lower than corresponding South African instruments: - Lower by an average of 1.5 basis points at the short end. - Lower by 12.75 basis points for longer maturities. - Interest-sensitive flows - Net outflows of 2.5 percent of GDP in first half of 2023 vs net inflows of 1.6 percent of GDP in same period in 2022. - Staff advice - Review daily liquidity operations and CFMs; if yield differences persist or widen, consider closer alignment of policy rate with SARB; sequence CFM reforms carefully. ### Financial stability risks and supervisory actions - Key metrics and vulnerabilities - Household debt-to-disposable income ratio: 78 percent at end-2022. - Over 70 percent of bank credit is interest-rate sensitive; half in real estate. - Mortgage rates on existing home loans increased 47 percent to 12.5 percent from 8.5 percent in 2020. - Average residential real estate values increased 5 percent over same period. - Retirement funds’ 2022 returns: nominal ROI -1.1 percent; real ROI -7.2 percent. - NBFIs’ deposits: more than 75 percent of deposits, posing wholesale funding risk to banks. - Progress and remaining actions - Macroprudential framework established; reporting requirements strengthened. - Banking Institutions Act 2023 adopted with BoN resolution powers; DGS operationalized. - Remaining: finalize resolution policy framework and implement macroprudential oversight and FIMA. ### Financial inclusion, SME credit access, and CBDC exploration - Access and constraints - Financial sector well developed but access to financial markets lags despite high bank account ownership. - Credit growth trailed recovery amid higher borrowing costs; banks cite lack of bankable projects despite abundant liquidity. - Government long-term debt yields reach 12 percent vs 11.5 percent prime lending rate for private sector. - Policy measures - Implement financial inclusion strategy, CFLV, improve bankability, financial literacy training. - CBDC - BoN exploring retail CBDCs for domestic use and wholesale CBDCs for cross-border payments as part of CMA regional consultative process; staff supports cautious, needs-based approach. ### Promoting private sector-led growth and structural constraints - Staff-identified constraints - (i) Burdensome regulatory environment and policy uncertainty (delays in legislation, e.g., Investment Promotion Bill). - (ii) Sizeable public sector wage premium (nearly 30 percent) and SOE presence draining talent. - (iii) High cost of inputs: energy and data. - Policy implications - Reduce public wage bill size while preserving performance-based premiums; use savings to upgrade infrastructure (railways, sustainable energy gridlines). - SOE reform in network services to increase competition and reduce input costs. - Conduct skills audit and expand vocational training under Namibia Training Authority. - Authorities’ view - Private sector-based growth is key objective; green hydrogen and oil/gas viewed as springboards for value chain participation. - Investments in railway (including Trans-Kalahari) and Walvis Bay strategic seaport expected to unlock growth. ### Projects, diversification, and natural-resource developments - Green Hydrogen Project (GHP) - Namibia: over 3,000 hours of sunlight annually; GHP plans 7GW total capacity (solar + wind) for electrolysis using desalinated water. - Targets: 10–12 million tons of green hydrogen by 2050. - Financing/partnerships: SDG Namibia One; EIB letter of intent to raise 500 million euros; Germany grant 40 million euros for pre-feasibility; Hyphen announced capital investment of $10 billion targeting 300 thousand tons H2/year by 2030 and electrolyzer capacity target of 3 GWs. - Government option to take 24 percent equity in Hyphen financed by 40 million euro grant via SDG; future equity via concessional loans and grants. - Cost estimates: McKinsey: US$1.5/kg by 2030; Green Hydrogen Organization: US$1.73-2.30/kg initial cost; current global production cost US$10–15/kg. - Commercial feasibility depends on European market commitments and decarbonization legislation. - Oil and gas exploration - Orange Basin discoveries since 2021: five discoveries in less than two years, estimated total reserves 11 billion barrels. - FID could be imminent in early 2024; production unlikely before 2030 due to appraisal/infrastructure timelines. - Kudu field: 3 trillion cubic feet of natural gas located 170 km offshore from Lüderitz. - NAMCOR expected to take 10 percent stake in production sharing; Kudu development could supply an onshore 400 MW electricity plant (joint project with BW Energy). - Lithium and rare earths - Significant exploration activity; two mines acquired by new investors moving toward large-scale production. - Government restricted export of unprocessed lithium to encourage local processing. - Environmental and water constraints noted; market risk from alternative battery technologies. - Complementary projects with independent value chains - Oshivela Green Steel Plant: annual capacity 1 million tons pig iron; first phase 2024: 15 thousand tons direct reduced iron; investment estimated about US$30 million; expected to avoid 27 thousand tons CO2/year. - Green Shipping Corridors and ammonia bunkering facility: cost more than 2.2 billion euros. - HyRail Namibia: hydrogen locomotives; project estimated cost 7.6 million euros. - Port developments: NamPort MoU with Port of Rotterdam; 350 hectares allocated at Walvis Bay North Port; Lüderitz deep-water port at Angra Point 254 nautical miles south of Walvis Bay. ### Macroeconomic projections and key tables (selected series) - Real GDP growth (percent) - 2019: -0.8; 2020: -8.1; 2021: 3.5; 2022: 4.6; 2023 (Prelim.): 3.2; 2024–2028 (Proj.): 2.7, 2.7, 2.6, 2.6, 2.6. - GDP at market prices (N$ billions) - 2019: 181; 2020: 174; 2021: 184; 2022: 206; 2023 (Prelim.): 229; 2024–2028 (Proj.): 246, 266, 286, 307, 329. - GDP per capita (US$, current exchange rate) - 2019: 5,099; 2020: 4,226; 2021: 4,879; 2022: 4,854; 2023 (Prelim.): 4,727; 2024–2028 (Proj.): 4,931; 5,130; 5,284; 5,402; 5,507. - Consumer prices (average) - 2019: 3.7; 2020: 2.2; 2021: 3.6; 2022: 6.1; 2023 (Prelim.): 5.0; 2024–2028 (Proj.): 4.8 (each year). - Current account balance (percent of GDP, incl. grants) - 2019: -1.7; 2020: 2.8; 2021: -9.9; 2022: -12.8; 2023 (Prelim.): -10.7; 2024–2028 (Proj.): -9.6; -8.5; -7.1; -7.0; -6.2. - Gross Official Reserves (US$ millions, end of period) - 2019: 2,064; 2020: 2,163; 2021: 2,760; 2022: 2,799; 2023 (Prelim.): 2,953; 2024–2028 (Proj.): 3,078; 3,294; 3,446; 3,543; 3,730. - Months of imports of goods and services - 2019: 5.1; 2020: 4.1; 2021: 4.5; 2022: 4.5; 2023 (Prelim.): 4.6; 2024–2028 (Proj.): 4.7; 4.9; 4.9; 5.0; 5.0. - Public debt (percent of GDP) - 2019/20: 58.1; 2020/21: 63.4; 2021/22: 68.3; 2022/23: 68.7; 2023/24 (Proj.): 66.1; 2024/25–2028/29 (Proj.): 66.7; 66.5; 66.4; 66.0; 65.8. - Public and publicly guaranteed debt (percent of GDP) - 2019/20: 64.9; 2020/21: 69.8; 2021/22: 73.7; 2022/23: 74.7; 2023/24 (Proj.): 72.1; 2024/25–2028/29 (Proj.): 72.7; 72.5; 72.4; 72.0; 71.8. ### External sector assessment and reserves management (Annex II & FX) - External position - External position 2022 assessed weaker than level implied by fundamentals and desirable policies. - Drivers of CA widenings: fuel import bill spike, lower SACU receipts, imports generated by new mineral activity including oil and gas exploration. - Staff adjustments: SACU receipts +3.0 percent of GDP; imports from new mineral activity +2.4 percent of GDP (lithium 1.4; petroleum products 1.0). - Adjusted CA 2022: -7.8 percent of GDP; CA norm: -3.9 percent of GDP; CA gap: -3.9 percent of GDP; REER overvaluation implied 13.3 percent. - Reserves and FX interventions - End-2022 reserves: 4.5 months of imports or 22.2 percent of GDP; increase in reserves USD 39.0 million (~0.3 percent of GDP). - FDI flows in 2022: 8.3 percent of GDP. - At 4.5 months of imports end-2022, reserves above ARA minimum threshold of 3.9 months. - Under staff baseline, reserves expected to increase to 5 months of imports in medium term. - Gross Financing Needs (GFN) and debt servicing - GFN remained elevated in 2022 due to 2010 Eurobond repayment, higher interest costs, and financing needs of new mineral activity. - Finalizing Central Securities Depository (CSD) would attract non-resident investments and expand portfolio financing sources. ### Debt sustainability, GFN, and stress tests - Sovereign risk assessment - Overall assessment: moderate overall risk of sovereign stress. - Medium-term liquidity risk: high due to persistently high GFN and a spike in 2025/26 (repayment of 2015 Eurobond). - Authorities accumulating funds in external bond sinking fund to mitigate 2015 Eurobond spike. - DSA baseline public debt (selected) - Public debt (Percent of GDP): 2022: 68.7; 2023: 66.2; 2024: 67.1; 2025: 66.8; 2026: 66.5; 2027: 66.3; 2028: 66.3; 2029: 66.0; 2030: 65.9; 2031: 65.7. - Gross Financing Needs (Percent of GDP): 2022: 23.6; 2023: 21.8; 2024: 23.0; 2025: 28.4; 2026: 23.7; 2027: 20.2; 2028: 21.2; 2029: 22.2; 2030: 21.0; 2031: 22.1; 2032: 23.9. - Debt service (Percent of GDP): 2022: 22.8; 2023: 22.6; 2024: 22.8; 2025: 29.1; 2026: 24.7; 2027: 21.3; 2028: 22.3; 2029: 23.2; 2030: 22.1; 2031: 23.1; 2032: 25.0. - Stress-test outcomes and indices - Average baseline GFN: 23.1 percent of GDP (fanchart width 7.9 percent of GDP). - GFN financeability index (GFI): 15.6 — Risk signal: Moderate. - Debt Fanchart index (DFI): 1.9 — Risk Signal: Moderate. - Probabilities for 2023–2028: Prob. of missed crisis if stress not predicted: 27.3 pct; Prob. of false alarms if stress predicted: 17.0 pct. ### Risk Assessment Matrix (selected entries and policy responses) - Conjunctural Risks (Likelihood / Impact / Policy response) - Intensification of Regional Conflict(s): High / High. - Policy: accelerate fiscal adjustment; raise policy rate possibly above SARB; seek affordable external financing; provide targeted support to vulnerable households. - Commodity Price Volatility: High / High. - Policy: accelerate fiscal adjustment; raise policy rate possibly above SARB; provide targeted support to vulnerable households. - Abrupt Global Slowdown or Recession: Medium / High. - Policy: accelerate fiscal adjustment; raise policy rate possibly above SARB; accelerate structural reforms to diversify growth. - Social Discontent: Medium / High. - Policy: accelerate fiscal adjustment; raise policy rate possibly above SARB; accelerate structural reforms. - Monetary Policy Miscalibration, Systemic Financial Instability, Sovereign Debt Distress: Medium / Medium. - Policy: accelerate fiscal adjustment; consider raising policy rate above SARB; seek affordable external financing. - Structural and domestic risks - Deepening Geo-Economic Fragmentation: High / Medium — Provide targeted support to vulnerable households. - Cyberthreats: Medium / Medium — Improve digital infrastructure protection; develop business continuity plans. - Extreme Climate Events: Medium / Medium — Invest in climate-proof infrastructure; support climate-resilient agriculture. - Incomplete or Weak Policy Implementation: Medium / High — Increase buffers; identify permanent spending reductions and revenue measures; accelerate public extra-budgetary entity reforms; restrain wage bill; strengthen early retirement incentives and retraining. - Protracted Drought and Climate Change: Medium / Medium — Implement adaptation measures and structural transformation; provide targeted support to affected households. ### SDG costing, efficiency, and financing (Annex on SDG costing) - Estimated additional annual spending needed by 2030 - Total additional annual spending required for selected SDG sectors: about 6.5 percent of GDP by 2030. - Namibia’s additional spending slightly above median EME of 6.2 percent of GDP. - Sector-level additional spending estimates (percent of GDP) - Health: current spending 9.3 percent of GDP; additional 2030 spending estimated 0.8 percent of GDP. - Education: current spending 10.6 percent of GDP; well-performing peers spend 6.6 percent of GDP; potential to spend 2.0 percent of GDP less by 2030 with efficiency gains. - WASH: basic sanitation access 35 percent; additional annual spending in 2030: 1.8 percent of GDP. - Electricity: access 50 percent; projected consumption rise from 4.4 to 11.3 TWh by 2030; additional annualized cost in 2030: 2.6 percent of GDP. - Roads: rural access 72.5 percent; additional annualized spending in 2030 to reach 90 percent rural access: 3.3 percent of GDP (additional 9.8 thousand km of mostly gravel roads). - Sensitivity to efficiency - If efficiency gains do not materialize: SDG3 additional spending 4.9 percent of GDP (instead of 0.8); SDG4 additional 1.8 percent of GDP (instead of -2.0). - Financing options to explore - (i) more vigorous domestic revenue mobilization; (ii) grants; (iii) concessional loans; (iv) expenditure reallocation and efficiency gains; (v) private financing through improved business environment. ### Institutional capacity, statistics, and IMF support - Data and statistical shortcomings (as of Oct 30, 2023) - Key shortcomings: fiscal account coverage and itemization; recording imports and financial flows related to oil exploration; outdated CPI weights based on 2009/10 HIES; latest annual labor force survey for 2018. - NSA: quarterly GDP by production approach compiled with one-quarter timeliness; national accounts base year 2015. - Namibia subscribed to SDDS in December 2022. - IMF capacity development (recent TA and training focus) - Principal TA areas: PFM; tax and customs administration; financial supervision; liquidity management; macroprudential policies; cyber risk regulation; AML/CFT legal drafting; macroeconomic modelling; macroeconomic statistics. - Notable TA activities 2021–2023: Central Bank Digital Currency; bank resolution framework; macroprudential policies; CPI/PPI development; FSI reporting; SDG costing; budget preparation; tax administration. ### Staff appraisal — consolidated policy message - Macroeconomic and fiscal stance - Namibia resilient to global shocks; growth continues to rely on mineral sector. - Fiscal stance in FY23/24 tightened appropriately; part of SACU windfall used to expand social programs and saved as precautionary buffer. - Public sector wage bill and debt service still consume bulk of budget resources; fiscal consolidation needed to place public debt-to-GDP ratio on a firmly declining path. - Policy recommendations (condensed) - Accelerate and complete public wage and civil service reform, including early retirement modalities. - Implement SOE reform and adopt PAOP to guide restructuring and transparency. - Strengthen PFM through swift adoption of amended State Finance Act. - Maintain policy rate broadly aligned with SARB; raise above SARB if reserves come under pressure. - Strengthen macro-financial risk monitoring (BoN–NAMFISA data sharing; early warning indicators; operational DGS and ELA). - Ensure effective AML/CFT implementation to avoid FATF grey listing; strengthen BoN autonomy. - Urgently upgrade statistical capacity, complete 2023 census with skills audit and new labor force survey. - Negotiate gas-to-power commercial terms carefully (e.g., BW Energy–NamPower) to limit fiscal risks and ensure cost recovery. - Sequence and de-risk large projects via robust PPP frameworks and private‑sector risk sharing. *Source: IMF Country Report excerpt — "1. Selected Economic Indicators, 2019–2028" (Namibia).* ### 1. Selected Economic Indicators, 2019–2028 _____________________________________________________ 26 ### 1. Selected Economic Indicators, 2019–2028 ### Context and background - Since independence, Namibia has made notable progress in improving living standards while enjoying macroeconomic stability. - The expansion of the social safety net helped halve poverty and reduce elevated inequality inherited from the apartheid era. - The Human Capital Index (HCI), Global Gender Gap and the Rule of Law have improved above the regional average. - Namibia’s economy proved resilient to the COVID-19 pandemic and shocks from Russia’s war in Ukraine. - Limits of the economic model highlighted: - Mineral dependence and public sector dominance constrained diversification. - Public sector expanded job creation at the cost of the public wage bill rising from 37.7 percent of revenue in 2009 to over 50 percent in 2022. - Public debt-to-GDP ratio ballooned to nearly 69 percent of GDP in FY22/23. - Structural opportunities: - Abundant wind and solar resources supporting interest in cost-effective green hydrogen (Annex VI). - Lithium and rare earth deposits attracting investor interest for skills, employment, and value chains. - Promising offshore petroleum discoveries could turn Namibia into a significant oil producer. ### Recent developments - Real GDP growth rose to 4.6 percent in 2022, from 3.5 percent in 2021, driven by heightened global demand for diamonds and uranium. - Recovery accelerated in H1-2023, propelled by mining; agricultural output contracted during drought and growth excluding mining turned negative in Q2-2023. - Unemployment: 21 percent overall; 40 percent among youth. - Inflation: - Headline inflation peaked at 7.3 percent (y/y) in August 2022 and dropped to 4.5 percent (y/y) in July 2023. - Core inflation remained below 5 percent; inflation expectations returned to the target range of 3–6 percent. - Food price inflation exceeded 10 percent for nearly one year; vulnerable households may spend as much as 65 percent of income on food. - External sector (2022): - Current account deficit widened from 9.9 percent of GDP in 2021 to 12.8 percent of GDP in 2022, producing a CA gap of 3.9 percent of GDP. - Overall balance posted a modest surplus; gross reserves rose to US$2.8 billion at end-2022, ensuring 4.5 months of import cover. - Real effective exchange rate depreciated by 3.6 percent in 2022 (average y/y); rand depreciated by 11.2 percent against the U.S. dollar (average y/y). - Fiscal performance (FY22/23): - Fiscal deficit narrowed from 8.6 percent of GDP in FY21/22 to 5.3 percent of GDP in FY22/23. - Revenues rose by 1.2 percentage points of GDP due to one-off SOE dividends, higher mineral royalties, and higher VAT from compliance measures; SACU receipts dropped by 1.1 percent of GDP. - Expenditures declined by 2.2 percentage points of GDP. - Wage bill controlled via natural attrition, hiring limits, and below-inflation salary adjustments. - Reserve update: Reserves in September 2023 stood at 4.7 months of imports. - Monetary policy: - Bank of Namibia (BoN) raised rates by 400 bps since February 2022 to 7.75 percent, maintaining a 50 bps differential below the SARB’s policy rate. - BoN kept policy rate unchanged at its October MPC meeting following a "no change" decision at SARB’s September MPC meeting. - Financial sector: - End-June 2023 indicators show banks liquid, well-capitalized, and profitable; ROA and ROE improved. - Growth of credit to the private sector slowed to 4.2 percent (y/y) in 2022 from 7.1 percent (y/y) at end-2019. - NPL ratio at 5.5 percent at end-June 2023, below supervisory intervention point of 6 percent. - Mortgage rates rose by 400 bps since tightening began, to 12.5 percent at end-August 2023; half of bank lending is in real estate. ### Outlook and risks - Growth projections: - Real GDP growth (excluding offshore oil-related activities) projected to slow to 2.7 percent in 2024. - Over the medium term, real GDP growth (excluding potential offshore developments) expected to average 2.6 percent. - Inflation projection: - Headline inflation should ease to 6 percent in 2023 and drop below 5 percent starting in 2024. - External position: - Current account deficit projected to narrow to 10.7 percent of GDP in 2023. - International reserves projected to exceed the minimum ARA threshold by 6.2–12.9 percent throughout the projection horizon. - Fiscal outlook (FY23/24): - Overall fiscal deficit expected to drop to 3.9 percent of GDP. - Primary balance expected to turn positive at 1.2 percent of GDP, yielding a drop in the public debt-to-GDP ratio. - SACU revenues expected to recover by 3.7 percentage points of GDP based on a one-off adjustment to correct past under-disbursements. - Public expenditure expected to increase by 2.1 percentage points of GDP reflecting drought relief, expansion of student loans program, costs of population census, support for SOEs, and higher interest payments as maturing debt is repriced. - Risks (balanced): - Upside: development of oil, gas, critical minerals, and green hydrogen could boost investment, growth, and jobs. - Downside: deterioration in South Africa, resurging inflation requiring tighter monetary policy, weaker credit growth, strained household balance sheets, and delays in fiscal consolidation worsening public debt dynamics. - Fiscal-specific risks: premature expenditure commitments to large ventures such as the Green Hydrogen Project (GHP). - Global slowdown or geopolitical tensions could dampen demand for key commodities (including diamonds), depressing growth and reducing fiscal and external buffers. ### Policy discussions - Policy priorities (broadly unchanged since the 2022 Article Consultation): - Implement fiscal reforms to preserve public debt sustainability. - Strengthen statistical capacity to record large transactions associated with new mineral activity and establish a natural resource management framework. - Optimize the functioning of the currency peg. - Strengthen resilience and inclusiveness of the financial sector and manage macro-financial risks. - Promote private sector-led growth. - Emphasis on decisive reforms before transformative mineral resources fully develop to foster dynamic and inclusive growth and preserve macroeconomic stability. ### Ensuring fiscal sustainability while protecting the vulnerable - Authorities’ medium-term fiscal strategy anchored on gradual fiscal consolidation adopted in October 2020, including wage, SOE and tax administration reforms and rationalization of PSEMAS. - Implementation progress: - Tax administration and part of SOE reforms advanced; public wage reform and PSEMAS rationalization stalled. - Wage bill decline via natural attrition, hiring limits, and below-inflation salary adjustments reduced the public wage bill from 16.7 percent of GDP in FY20/21 to 14.8 percent in FY22/23. - This decline contributed more than a half of the 3.4 percentage point of GDP in deficit reduction between FY20/21 and FY22/23. - Mid-Year Budget Review (initiated on October 31st) projects a deficit reduction by 1 percentage point of GDP in FY23/24, with a significant SACU rebound used to cover higher interest cost and additional expenses and the remainder saved as a precautionary buffer. - Official Medium-Term Fiscal Framework (Text Table 1) key entries (Percent of GDP; based on authorities' GDP projections in the 2023/24 Mid-Year Budget Review): - 2022/23 Act.: Total Revenue and Grants 30.7; Revenue 30.6; SACU receipts 6.7; Grants 0.1; Total Expenditure 35.8; Personnel 14.8; Interest Payments 4.5; Primary Balance -0.7; Overall Balance -5.2. - 2023/24 MYBR Proj.: Total Revenue and Grants 34.0; Revenue 33.7; SACU receipts 10.5; Grants 0.3; Total Expenditure 38.2; Personnel 14.1; Interest Payments 5.1; Primary Balance 0.9; Overall Balance -4.2. - 2024/25 Proj.: Total Revenue and Grants 31.8; Revenue 31.5; SACU receipts 8.6; Grants 0.3; Total Expenditure 36.9; Personnel 13.3; Interest Payments 5.1; Primary Balance -0.1; Overall Balance -5.1. - 2025/26 Proj.: Total Revenue and Grants 30.4; Revenue 30.3; SACU receipts 7.6; Grants 0.1; Total Expenditure 34.4; Personnel 12.5; Interest Payments 4.9; Primary Balance 0.9; Overall Balance -4.0. - 2026/27 Proj.: Total Revenue and Grants 31.1; Revenue 31.0; SACU receipts 8.2; Grants 0.1; Total Expenditure 33.2; Personnel 11.8; Interest Payments 4.9; Primary Balance 2.9; Overall Balance -2.1. - MTFF envisages an adjustment of about 2 percentage points of GDP in FY24/25–FY26/27 to be achieved through public wage bill reform, rationalization of PSEMAS and cutting transfers to SOEs. - Staff baseline (less ambitious than authorities’ MTFF) projects primary balance improving to a surplus of 1 percent of GDP by FY26/27 versus nearly 3 percent of GDP in the MTFF. - Staff assumptions and conditionality: - Staff assumes continued moderation of wage bill growth to contain public debt. - Full implementation of reforms is treated as upside risk; failure to consolidate or further declines in SACU receipts or diamond sales would require accelerated public sector reforms beyond wage bill control. *Source: IMF Country Report excerpt — "1. Selected Economic Indicators, 2019–2028" (Namibia).* ### 17. The specific assumptions underlying staff’s baseline are: (i) a full wage-inflation ### 1namea2023002 - 17. The specific assumptions underlying staff’s baseline are: (i) a full wage-inflation ### Baseline assumptions and public debt dynamics - Specific baseline assumptions: - (i) a full wage-inflation indexation in FY24/25 (2024 is an election year); - (ii) a one-time pause in wage adjustment FY25/26; - (iii) a full wage-inflation indexation thereafter. - Public debt projections under staff’s baseline: - Public debt-to-GDP ratio projected to rise modestly to 66.7 percent of GDP in FY24/25. - Public debt-to-GDP ratio projected to ease to 65.8 percent of GDP in FY28/29. - Vulnerabilities and scenarios: - “Passive” scenario: continued wage indexation (including in FY25/26) causes the public debt-to-GDP ratio to drift up. - Elevated gross financing needs projected to remain above the 20-percent benchmark for EMs over the medium term. - Overall risk of debt distress assessed as moderate (Annex III). ### Fiscal consolidation, reform priorities, and revenue mobilization - Context and rationale: - Domestic tax revenue (excluding SACU receipts) at close to 20 percent of GDP (compared with a median tax-to-GDP ratio of 13 percent in SSA and 18 percent in other emerging economies). - Given high tax revenue, consolidation plans appropriately focused on expenditure measures likely to generate sizeable savings with minimal negative impact on growth. - Proposed tax measures (MYBR envisages tax relief expected to be broadly revenue neutral): - (i) CIT rate reduction gradually to 30 percent; - (ii) PIT threshold increases; - (iii) tax incentives for youth apprenticeship. - Key reform actions to realize expenditure savings: - Comprehensive civil service reform to rein in government spending durably and improve efficiency: - Public sector wage bill accounts for about 40 percent of public expenditures. - Public wages carry a high premium compared to the private sector. - Functional review of the civil service needed and an incentive compatible program of early retirement adopted to prepare for reform. - Finalize the Public Asset Ownership Policy (PAOP) to guide SOE reform and restructuring; increase transparency in allocation of subsidies and transfers. - Strengthen tax administration: enhance NamRA governance by developing a strategic management framework and improving operational oversight. - Raise additional revenues from natural resources: - Revenues from commercial fishing could increase considerably if fishing licenses are allocated transparently on a competitive basis. - Namibia currently auctions only 5 percent of its fish quota. - Review fiscal regime for the mining sector to address thin capitalization and unlimited loss carryforward while maintaining investment climate. ### Institutional public financial management (PFM) and fiscal risk management - Priority institutional reforms: - Expedite completion of the amended State Finance Bill and submit to Parliament. - Enhance upfront budget preparation; streamline the mid-year budget review; further digitalize the budget process. - Strengthen appraisal and selection process for large public projects, drawing on the forthcoming C-PIMA. - Publish a fiscal risk statement for large projects, PPPs, and SOE-underwritten projects (e.g., GHP). - Finalize beneficial ownership registries and publish the report on execution of COVID-19-related spending and beneficial ownership information. ### Social protection and food insecurity - Acute food insecurity and response: - 22 percent of Namibia’s population reported to have experienced acute food insecurity in July–September 2023 due to prolonged drought and depletion of low-income household food stocks. - Share projected to increase to 26 percent in October 2023–March 2024. - Drought relief budgeted at 0.4 percent of GDP in the MYBR to provide food to the insecure. - Authorities recognize need to expand coverage of Conditional Basic Income Grant targeted to the poorest facing food insecurity. ### Management of natural resources and sovereign wealth - Capacity and data needs: - Increasing capacity needed to track transactions associated with oil exploration; current partial information suggests cost of oil exploration likely significant relative to Namibia’s GDP and only a small part of offshore activity is captured in official statistics. - Strengthen coordination among responsible agencies to collect, validate, and record all relevant data. - Taxation and revenue assessment: - Enhance NamRA’s capacity to assess tax obligations of mineral and petroleum companies. - Rigorous monitoring of current mining activity to assess future mineral revenue potential. - Sovereign wealth fund guidance: - Welwitschia fund (WF) should be integrated into the budget with accumulation and withdrawal rules anchored on a sustainable nonoil primary balance. - At the current juncture, debt reduction should take precedence over asset accumulation. - Staff emphasized subscribing to the Extractive International Transparency Initiative (EITI) and strengthening anti-corruption mechanisms. ### Currency peg, monetary policy, and reserve considerations - Performance and assessment of the rand peg: - Peg has delivered low inflation: 2-year average of 5.6 percent compared to 14.2 percent in SSA. - Peg facilitates cross-border transactions with South Africa. - Interest rate alignment and market signals: - Maintaining strict interest parity has become challenging under current market conditions. - For the first time in recent history, government bond yields in Namibia are lower than corresponding South African instruments: - Lower by an average of 1.5 basis points at the short end of the curve. - Lower by 12.75 basis points for longer maturities. - Policy rate currently at 50 basis points below the SARB. - Interest rate-sensitive portfolio instruments: net outflows of 2.5 percent of GDP in the first half of 2023 compared to net inflows of 1.6 percent of GDP in the same period in 2022. - Staff advice and contingent measures: - Review daily liquidity operations and CFMs to ensure policy (repo) rate is more binding on banks’ cost of funds and short-term capital flows. - If yield difference persists or widens, closer alignment of the policy rate could be warranted to stem portfolio outflows and support reserve adequacy. - Reform of CFMs should be well prepared and sequenced. ### Financial stability risks and supervisory actions - Banking sector vulnerabilities and metrics: - Banking system remains stable but vulnerable to higher interest rates and wider financial volatility. - Debt-to-disposable income ratio of households: 78 percent at end-2022. - Over 70 percent of bank credit is interest-rate sensitive; half of bank credit is in real estate. - Mortgage rates in existing home loans have increased 47 percent to 12.5 percent from the lows of 8.5 percent in 2020. - Average residential real estate values have seen only a 5 percent increase over the same period. - Nonbank financial intermediation and market risks: - Equities exceed 76 percent of Namibia’s external portfolio assets (primarily owned by NBFIs). - Retirement funds’ returns in 2022: negative nominal ROI of 1.1 percent and negative real ROI of 7.2 percent. - NBFIs’ deposits constitute more than 75 percent of deposits, posing wholesale funding risk to banks. - Progress on FSSA recommendations and tools: - Established macroprudential framework and strengthened reporting requirements. - Macroprudential Oversight Committee should use the dynamic stress testing model regularly. - Emergency liquidity assistance (ELA) and deposit guarantee scheme (DGS) should be ready for use. - Recent legal and supervisory progress includes adoption of the Banking Institutions Act 2023 with BoN resolution powers and operationalized Deposit Guarantee Scheme; remaining actions include finalization of resolution policy framework and implementation steps for macroprudential oversight and FIMA. ### Financial inclusion, SME credit access, and CBDCs - Access to finance and credit environment: - Financial sector well developed in peer comparisons but access to financial markets lags other metrics despite high bank account ownership (especially for women). - Credit growth has trailed economic recovery amid higher borrowing costs. - Government long-term debt yields reaching 12 percent compared to 11.5 percent prime lending rate for the private sector. - Banks cite lack of bankable projects as a dominant factor depressing private sector credit despite abundant bank liquidity. - Policy measures to improve access: - Implement financial inclusion strategy, Catalytic First Loss Venture Fund (CFLV). - Improve bankability of projects and financial literacy training. - CBDC approach: - BoN exploring retail CBDCs for domestic use and wholesale CBDCs for cross-border payments as part of CMA regional consultative process. - Staff supports a cautious, needs-based approach to identify specific benefits relative to risks. *Source: IMF staff calculations.* ### 37. The authorities agreed that lack of financial market access constrains private sector ### 1namea2023002 - 37. The authorities agreed that lack of financial market access constrains private sector ### Financial sector strategy, inclusion, and market access - Authorities' diagnosis: - Lack of financial market access constrains private sector development. - Bank of Namibia (BoN) updating its 2011–21 financial sector strategy spanning: - (i) digital transformation with strengthened oversight; - (ii) sustainable financing initiatives and financial infrastructure modernization; - (iii) leveraging digitalization to enhance inclusion; and - (iv) futureproofing of the financial sector workforce. - Operational developments: - The authorities are operationalizing the CFLV and noted an increased call on the Credit Guarantee Scheme (CGS) by SMEs. - On CBDCs, analyses are ongoing to assess the impact on bank intermediation and monetary policy transmission. - Note on instruments: - CGS is a risk-sharing mechanism through which the government guarantees a part of the loan. - Visual / supporting material: - Text Figure 14. Financial Inclusion (presented in source). ### Safeguards and AML/CFT framework - Safeguards assessment: - A first-time safeguards assessment of the BoN, in connection with the 2021 RFI, was completed in March 2023. - Assessment findings: - Some good safeguards and practices were established. - Enhancements needed in other areas, including strengthening oversight and controls in foreign reserves management. - Recommendation to amend the BoN Act to further safeguard the central bank’s autonomy. - Audit mechanisms and financial reporting broadly followed international standards, but the process of external auditors’ selection needed improvement. - Follow-up: - Steps to enhance central bank independence will be discussed through a follow-up TA engagement. - AML/CFT reforms and risks: - Technical Compliance deficiencies and effectiveness challenges identified in Namibia’s AML/CFT assessment have put Namibia at risk of grey listing by the Financial Action Task Force in early 2024. - Authorities’ legal steps taken: - Amending laws critical for the AML/CFT architecture, including: - ensuring targeted financial sanctions are implemented without delay; - requiring the collection of beneficial ownership information for all legal entities; - introducing licensing and supervisory framework for virtual asset service providers. - Implementation priorities: - Effective implementation of the amended laws; - Carry on the ongoing ML/TF investigations and prosecutions; - Ensure effective implementation of preventive measures; - Strengthen supervision. - Support: - IMF legal technical assistance and other partners are supporting these efforts. - Authorities’ views: - Committed to strengthening safeguards and buttressing the AML/CFT framework. - Addressed key weaknesses identified in the SA and are in discussions with Fund staff on steps to enhance BoN’s autonomy. - Noted progress in amending the AML/CFT legal framework but pointed to the penury of prosecutable cases to demonstrate compliance. ### Promoting private sector-led growth - Rationale: - Private sector-led growth is key for sustainable job creation and diversification, especially given new opportunities from mineral discoveries and investments in the green economy (Annex VI). - Staff-identified private sector constraints: - (i) An excessively burdensome regulatory environment and policy uncertainty fueled by delays in passing key legislation, including the Investment Promotion Bill; - (ii) The sizeable public sector wage premium and SOE presence in several sectors, draining talent and exacerbating skills mismatch, yet to be fully assessed through a skills audit; - (iii) High cost of inputs such as energy and data. - Fiscal reform implications: - Staff research shows the nearly 30-percent public wage premium diverts talent from the private sector, elevates input costs, and reduces efficiency (Annex VII). - Savings from public wage reform could generate fiscal space to upgrade infrastructure, including: - Upgrading and expanding the railway network; - Investing in sustainable energy production and gridlines, including in remote areas. - SOE reform in network services (water, electricity, transport) would increase competition, reduce input costs, and improve commercial feasibility across sectors. - Authorities’ views: - Private sector-based growth is the government's key objective. - Investments in green hydrogen and potentially oil and gas viewed as springboards for participation in value chains. - Working with partners to acquire relevant skills in emerging sectors and developing vocational institutions under the Namibia Training Authority to mitigate skills mismatch. - Success noted in commercial agriculture (blueberries, dates, grapes, meat). - Investments in the railway network (including the Trans-Kalahari railway connecting Namibia and Botswana) and the strategic seaport at Walvis Bay expected to unlock growth. - Acknowledged existence of a public wage premium as a key job market issue; also noted dominance of South African companies as a factor constraining local entrepreneurship. - Key legislation delays (e.g., Investment Promotion Bill) due to extensive private sector consultations; once finalized, expect policy uncertainty to dissipate. ### Statistical issues - Data provision: - Broadly adequate for surveillance. - Key areas for improvement: - Coverage and itemization of fiscal accounts; - Recording of imports and financial flows related to oil exploration activity in national accounts and external sector statistics. ### Staff appraisal — macroeconomic, fiscal, external, and financial stability - Growth and inflation: - Namibia has shown resilience to global shocks; growth continues to rely on the mineral sector. - Output is estimated to have surpassed the pre-pandemic level in 2023 while inflation has come down substantially from its highs in 2022. - Fiscal stance and public finances: - The fiscal stance in FY23/24 has been appropriately tightened, with part of the SACU revenue windfall used to expand social programs and part saved as a precautionary buffer. - Although tightening helped contain the rise in public debt, the public sector wage bill and debt service still consume the bulk of budgetary resources, despite measures since FY21/22 to contain public wage bill expansion. - To achieve growth potential and tackle unemployment (especially high for the young), Namibia needs to streamline its public sector and address the public wage premium to foster a more diverse and dynamic economy that creates jobs and reduces poverty and inequality. - External position: - Namibia’s external position assessed weaker than level implied by fundamentals and desirable policies (Annex II). - The current account deficit widened substantially in 2022 partly due to the intensity of oil exploration and will likely remain elevated in the near term. - Overall external balance has remained positive, partly due to FDI generated by oil exploration and higher reserves; received a boost from the post-pandemic recovery in SACU receipts, expected to normalize next year. - Large transactions associated with oil and gas exploration increased urgency to upgrade statistical capacity and strengthen external sector monitoring. - The potential for significant future oil and gas revenue raises the need to develop specialized tax capacity, review existing legislation, and finalize a natural resource management framework. - Fiscal consolidation and public employment reform: - The current fiscal stance is more expansionary than warranted given the need to put the public debt-to-GDP ratio on a firmly declining path. - Overall risk of debt distress is moderate. - Fiscal consolidation is pivotal to increase fiscal space for future shocks, expand the social safety net, finance infrastructure upgrades, and improve external competitiveness. - Policy recommendations: - Adopt a systematic approach to public employment and remuneration: keep and attract needed talent while strategically downsizing in non-critical areas. - Complete the ongoing functional review of the civil service and finalize modalities of the early retirement scheme. - These reforms would anchor medium-term fiscal consolidation plans beyond just containing the public debt-to-GDP ratio. - SOE reform and public financial management: - SOE reform saw results from public delisting and sale of companies. - Issuance of the PAOP paper for stakeholder consultation marks a step toward a reform roadmap for remaining SOEs. - Staff encourages swift adoption of the amended State Finance Act to underpin public financial management improvements. - Monetary policy and reserves: - Maintaining the policy rate broadly aligned with the SARB and managing an adequate level of reserves will help anchor inflation and preserve the currency peg. - If reserves come under pressure due to sustained portfolio outflows and negative shocks to SACU receipts, raising the policy rate above the SARB and accelerating fiscal consolidation could be necessary. - Financial stability and macro-financial risks: - Continued monitoring of macro-financial risks and assessing mitigation measures’ efficiency will support financial stability. - The financial sector remains stable, but risks increased with households facing higher variable mortgage rates and NBFIs vulnerable to financial market volatility. - Welcomed progress in developing the macroprudential policy framework. - Recommendations: - Strengthen systematic data-sharing between BoN and NAMFISA; - Develop framework for early warning indicators; - Establish functional DGS and ELA frameworks to mitigate risks. - AML/CFT and central bank autonomy: - Progress welcomed on strengthening AML/CFT framework and addressing areas identified in the SA; effective implementation of newly passed laws remains the current hurdle before the FATF decision on grey listing. - Staff stands ready to support legal reforms to further strengthen central bank autonomy. - Leveraging new discoveries and green energy: - New mineral discoveries and investment in green energy provide opportunities to boost growth, employment, and diversification. - Policy priorities to seize opportunities: - Strengthen PPP framework; - Address constraints hampering entrepreneurship (regulatory burden, skills mismatches, input costs for energy, water, and data); - Update statistical information on labor force and skills profile to tailor training to emerging private sector opportunities. - Urgent statistical actions: - Complete the 2023 census with a skills audit and a new labor force survey. - Migration and skills policy: - Revise immigration laws to modernize and streamline processes for attracting international expertise and using it for local training. *Source: IMF staff report text provided in the content unit.* ### 53. Staff recommends that the next Article IV consultation with Namibia be held on the ### 1namea2023002 - 53. Staff recommends that the next Article IV consultation with Namibia be held on the standard 12-month cycle. ### Macroeconomic outlook and near-term projections - Staff recommends the next Article IV consultation with Namibia be held on the standard 12-month cycle. - Real GDP growth (percent): - 2019: -0.8 - 2020: -8.1 - 2021: 3.5 - 2022: 4.6 - 2023 (Prelim.): 3.2 - 2024–2028 (Proj.): 2.7, 2.7, 2.6, 2.6, 2.6 - GDP at market prices (N$ billions): - 2019: 181 - 2020: 174 - 2021: 184 - 2022: 206 - 2023 (Prelim.): 229 - 2024–2028 (Proj.): 246, 266, 286, 307, 329 - GDP per capita (US$, current exchange rate): - 2019: 5,099 - 2020: 4,226 - 2021: 4,879 - 2022: 4,854 - 2023 (Prelim.): 4,727 - 2024–2028 (Proj.): 4,931; 5,130; 5,284; 5,402; 5,507 - Consumer prices (average): - 2019: 3.7 - 2020: 2.2 - 2021: 3.6 - 2022: 6.1 - 2023 (Prelim.): 5.0 - 2024–2028 (Proj.): 4.8, 4.8, 4.8, 4.8, 4.8 ### External sector and reserves - Current account balance (percent of GDP, including official grants): - 2019: -1.7 - 2020: 2.8 - 2021: -9.9 - 2022: -12.8 - 2023 (Prelim.): -10.7 - 2024–2028 (Proj.): -9.6; -8.5; -7.1; -7.0; -6.2 - Exports and imports (US$, percent changes and levels): - Exports (US$ percent change): 2019: -7.6; 2020: -19.0; 2021: 14.1; 2022: 17.3; 2023: 1.4; 2024–2028: 7.0; 4.9; 3.2; 3.8; 3.1 - Imports (US$ percent change): 2019: -9.8; 2020: -21.0; 2021: 35.2; 2022: 16.6; 2023: -2.3; 2024–2028: 4.1; 2.9; 3.3; 3.4; 1.8 - Exports, f.o.b. (US$ millions): 2019: 3,879; 2020: 3,140; 2021: 3,582; 2022: 4,201; 2023 (Prelim.): 4,261; 2024–2028 (Proj.): 4,558; 4,780; 4,934; 5,124; 5,283 - Imports, f.o.b. (US$ millions): 2019: -5,182; 2020: -4,096; 2021: -5,536; 2022: -6,456; 2023 (Prelim.): -6,310; 2024–2028 (Proj.): -6,566; -6,760; -6,982; -7,217; -7,346 - Gross Official Reserves (US$ millions, end of period): - 2019: 2,064 - 2020: 2,163 - 2021: 2,760 - 2022: 2,799 - 2023 (Prelim.): 2,953 - 2024–2028 (Proj.): 3,078; 3,294; 3,446; 3,543; 3,730 - Months of imports of goods and services: - 2019: 5.1 - 2020: 4.1 - 2021: 4.5 - 2022: 4.5 - 2023 (Prelim.): 4.6 - 2024–2028 (Proj.): 4.7; 4.9; 4.9; 5.0; 5.0 - External public debt (including IMF) (percent of GDP): - 2019: 18.6 - 2020: 18.9 - 2021: 17.2 - 2022: 18.1 - 2023 (Prelim.): 17.8 - 2024–2028 (Proj.): 16.5; 14.5; 13.4; 12.6; 11.9 ### Fiscal position and public debt - Central government fiscal year totals (N$ millions): - Total Revenue and Grants: - 2019/20: 58,525 - 2020/21: 58,103 - 2021/22: 55,365 - 2022/23: 64,339 - 2023/24 (Proj.): 78,794 - 2024/25–2028/29 (Proj.): 78,587; 83,963; 90,772; 97,683; 104,554 - Total Expenditure and Net Lending: - 2019/20: 68,571 - 2020/21: 73,549 - 2021/22: 71,583 - 2022/23: 75,498 - 2023/24 (Proj.): 87,942 - 2024/25–2028/29 (Proj.): 91,035; 95,885; 102,946; 110,306; 117,837 - Fiscal balances (percent of GDP, fiscal year): - Total Revenue and Grants: - 2019/20: 32.6 - 2020/21: 32.9 - 2021/22: 29.2 - 2022/23: 30.4 - 2023/24 (Proj.): 33.8 - 2024/25–2028/29 (Proj.): 31.3; 31.0; 31.2; 31.2; 31.2 - Overall balance: - 2019/20: -5.6 - 2020/21: -8.7 - 2021/22: -8.6 - 2022/23: -5.3 - 2023/24 (Proj.): -3.9 - 2024/25–2028/29 (Proj.): -5.0; -4.4; -4.2; -4.0; -4.0 - Primary balance: - 2019/20: -1.8 - 2020/21: -4.6 - 2021/22: -4.3 - 2022/23: -0.8 - 2023/24 (Proj.): 1.2 - 2024/25–2028/29 (Proj.): 0.1; 0.7; 1.0; 1.1; 1.0 - Public and publicly guaranteed debt (percent of GDP): - 2019/20: 64.9 - 2020/21: 69.8 - 2021/22: 73.7 - 2022/23: 74.7 - 2023/24 (Proj.): 72.1 - 2024/25–2028/29 (Proj.): 72.7; 72.5; 72.4; 72.0; 71.8 - Public debt (percent of GDP): - 2019/20: 58.1 - 2020/21: 63.4 - 2021/22: 68.3 - 2022/23: 68.7 - 2023/24 (Proj.): 66.1 - 2024/25–2028/29 (Proj.): 66.7; 66.5; 66.4; 66.0; 65.8 ### Monetary and financial sector indicators - Broad money (M2) levels (N$ millions): - 2019: 115,336 - 2020: 124,652 - 2021: 129,944 - 2022: 129,958 - 2023 (Proj.): 145,138 - 2024–2028 (Proj.): 156,661; 169,497; 183,013; 197,661; 213,469 - Reserve money (Central Bank, N$ millions): - 2019: 7,081 - 2020: 8,223 - 2021: 8,238 - 2022: 9,605 - 2023 (Proj.): 10,726 - 2024–2028 (Proj.): 11,578; 12,527; 13,526; 14,608; 15,776 - Net foreign assets (N$ millions): - 2019: 26,506 - 2020: 28,951 - 2021: 32,733 - 2022: 36,918 - 2023 (Proj.): 41,347 - 2024–2028 (Proj.): 43,995; 48,631; 52,339; 55,170; 60,023 - Domestic credit and claims: - Domestic credit (N$ millions): 2019: 127,626; 2020: 134,933; 2021: 143,425; 2022: 144,956; 2023 (Proj.): 151,053; 2024–2028 (Proj.): 157,710; 165,468; 174,135; 183,296; 192,991 - Claims on private sector (N$ millions): 2019: 103,211; 2020: 105,668; 2021: 106,773; 2022: 111,235; 2023 (Proj.): 115,000; 2024–2028 (Proj.): 119,349; 124,721; 130,910; 137,462; 144,445 - Key interest rates and spreads (end period / latest available): - BoN repo rate: 2019: 6.50; 2020: 3.75; 2021: 3.75; 2022: 6.75; 2023: 7.75 (Rate for 2023 is as per MPC decision of October 25, 2023.) - Deposit rate (end period): 2019: 5.7; 2020: 4.2; 2021: 2.9; 2022: 3.7; 2023: 7.0 (deposit rate, 2023 data is as of end-September) - Lending rate (end period): 2019: 9.9; 2020: 7.9; 2021: 6.9; 2022: 8.6; 2023: 11.5 - Three-month T-bill rate: 2019: 7.6; 2020: 4.0; 2021: 4.9; 2022: 8.3; 2023: 8.5 ### Financial sector soundness indicators - Bank capital and asset quality: - Regulatory capital to risk-weighted assets: - 2014: 14.7 - 2019: 15.3 - 2022: 17.0 - 2023 Q2: 16.4 - Nonperforming loans to total gross loans: - 2014: 1.2 - 2019: 4.6 - 2020: 6.4 - 2022: 5.5 - 2023 Q2: 5.5 - Profitability and liquidity: - Return on assets (before taxes): - 2014: 3.4 - 2019: 2.8 - 2022: 2.7 - 2023 Q2: 2.9 - Liquid assets to total assets: - 2014: 12.7 - 2019: 13.3 - 2022: 15.3 - 2023 Q2: 15.9 - Other indicators: - Customer deposits to total (non-interbank) loans: - 2014: 98.6 - 2019: 98.8 - 2022: 103.1 - 2023 Q2: 106.7 - Net open position in foreign exchange to capital: - 2014: 2.7 - 2019: 5.3 - 2022: 4.4 - 2023 Q2: 1.1 ### Policy-relevant fiscal and external metrics highlighted by staff - External buffers have strengthened in projected years: - Gross Official Reserves rising from 2,953 (2023 Prelim.) to 3,730 (2028 proj.) US$ millions. - Months of imports of goods and services projected at 5.0 in 2027 and 2028. - Fiscal consolidation path (fiscal year basis) shows: - Overall balance improving from -5.3 (2022/23) to -3.9 (2023/24 proj.), with subsequent projected deficits of -5.0; -4.4; -4.2; -4.0; -4.0 through 2028/29. - Primary balance turning positive in 2023/24 (1.2 percent of GDP) and remaining modestly positive in most projection years. - Debt dynamics: - Public debt peaks in projection at 72.7 percent of GDP in 2024/25 (public and publicly guaranteed debt) and gradually declines to 71.8 percent by 2028/29. - Public debt (excluding guarantees) projected to decline from 66.7 percent (2024/25) to 65.8 percent (2028/29). - Balance of payments: - Current account deficits narrow from -10.7 percent of GDP (2023 prelim.) to -6.2 percent of GDP (2028 proj.). - Trade balance remains a substantial deficit across the projection period (e.g., -16.4 percent of GDP in 2023; projected -13.0 percent in 2028). *Sources: Namibian authorities; and IMF staff estimates and projections.* ### Annex I. Risk Assessment Matrix ### Annex I. Risk Assessment Matrix ### Conjunctural Risks - Intensification of Regional Conflict(s) - Likelihood: High - Expected Impact on the Economy: High. "Limited direct trade and financial links to Russia and Ukraine. However, higher global energy and food prices could further increase inflation, worsen the external position, and put additional pressures on reserves, slow down the recovery and increase poverty and inequality." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s, and seeking affordable external financing (if needed) would support reserves and the currency peg. - Provide targeted support to vulnerable households to mitigate the impact of higher fuel and food prices. - Commodity Price Volatility - Likelihood: High - Expected Impact on the Economy: High. "Higher international oil and food prices would increase inflation, put additional pressure on international reserves, slow down economic recovery and increase poverty and inequality." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s, and seeking affordable external financing would support reserves and the currency peg. - Provide targeted support to vulnerable households to mitigate the impact of higher fuel and food prices. - Abrupt Global Slowdown or Recession - Likelihood: Medium - Expected Impact on the Economy: High. "Slower global demand for commodities would negatively impact the mining sector, worsen the fiscal and current account positions, add pressures on reserves, and weaken growth." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s, and seeking affordable external financing would support reserves and the currency peg. - Accelerate structural reforms to support the private sector and foster economic diversification and alternative sources of growth. - Social Discontent - Likelihood: Medium - Expected Impact on the Economy: High. "Slower global demand for commodities would negatively impact the mining sector with spillovers to the economy, worsen the fiscal and current account positions, add pressures on reserves, and weaken growth." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s, and seeking affordable external financing would support reserves and the currency peg. - Accelerate structural reforms to support the private sector and foster economic diversification and alternative sources of growth. - Monetary Policy Miscalibration - Likelihood: Medium - Expected Impact on the Economy: Medium. "Slower growth and higher financing cost deteriorating the fiscal balance and worsening the debt level; lower commodity prices translating into larger current account and fiscal imbalances; lower capital inflows." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s and seeking affordable external financing would support reserves and the currency peg. - Systemic Financial Instability - Likelihood: Medium - Expected Impact on the Economy: Medium. "Slower growth and higher financing costs deteriorating the fiscal balance and worsening the debt level; lower commodity prices translating into larger current account and fiscal imbalances; lower capital inflows." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s and seeking affordable external financing would support reserves and the currency peg. - Sovereign Debt Distress - Likelihood: Medium - Expected Impact on the Economy: Medium. "Slower growth and higher financing costs deteriorating the fiscal balance and worsening the debt level; lower commodity prices translating into larger current account and fiscal imbalances; lower capital inflows." - Recommended Policy Response: - Accelerating fiscal adjustment, raising the policy rate, possibly above South Africa’s and seeking affordable external financing would support reserves and the currency peg. ### Structural Risks - Deepening Geo-Economic Fragmentation - Likelihood: High - Expected Impact on the Economy: Medium. "Limited direct trade and financial links to Russia and Ukraine. However, higher global energy and food prices could further increase the inflationary pressure." - Recommended Policy Response: - Provide targeted support to vulnerable households to ensure inclusive recovery. - Cyberthreats - Likelihood: Medium - Expected Impact on the Economy: Medium. "Financial and economic instability." - Recommended Policy Response: - Improve protection of digital infrastructure against hacking attempts. - Develop business continuity plan. - Extreme Climate Events - Likelihood: Medium - Expected Impact on the Economy: Medium. "Damage to infrastructure, disruptions to economic activities, and increasing water and food shortages will reduce medium-term growth and increase inflationary pressures." - Recommended Policy Response: - Invest in climate proofing of infrastructure. - Support climate resilient agriculture. - Provide targeted support to vulnerable households. ### Domestic Risks - Incomplete or Weak Policy Implementation - Likelihood: Medium - Expected Impact on the Economy: High. "Rising public debt, and tighter budget financing; declining international reserves; possible disorderly fiscal adjustment and deterioration in financial sector’s asset quality." - Recommended Policy Response: - Increase buffers, identify permanent spending reductions and revenue mobilization measures that support long-term development. - Accelerate reforms of public extra budgetary entities, continue policies restraining the wage bill, strengthen upfront incentives for early retirement and retraining. - Implement mitigating measures for the most vulnerable. - Monitor and manage key fiscal risks and financial sector vulnerabilities. - Protracted Drought and Climate Change in Southern Africa - Likelihood: Medium - Expected Impact on the Economy: Medium. "Higher food prices; lower electricity production; fiscal costs to support farmers and rural population; higher unemployment." - Recommended Policy Response: - Implement adaptation measures to climate shocks. - Accelerate the structural transformation of the economy. - Provide targeted support to affected households. *Based on the latest G-RAM (July 21, 2023). The Risk Assessment Matrix shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective assessment ("low" <10 percent, "medium" 10–30 percent, "high" 30–50 percent). Conjunctural shocks and scenario highlight risks that may materialize over a shorter horizon (between 12 to 18 months).* *Annex II. External Sector Assessment (selected findings and projections)* - Overall Assessment: "The external position of Namibia in 2022 is assessed to have been weaker than the level implied by fundamentals and desirable policies." - 2021 CA deficit: 9.9 percent of GDP. - 2022 CA deficit: 12.8 percent of GDP. - Drivers: fuel import bill (spike in fuel prices due to the onset of Russia’s war in Ukraine), lower SACU receipts due to a one-off adjustment, imports generated by new mineral activity, including exploration of recently discovered oil and gas reserves. - Staff estimates / preliminary data adjustments: - Adjustment to SACU receipts: 3.0 percent of GDP. - Imports generated by new mineral activity: 2.4 percent of GDP. - 2023 CA deficit projection: expected to narrow to 10.7 percent of GDP based on lower import fuel prices (decreasing 16.5 percent from 2022), higher SACU receipts and continued strength in mineral exports. - Foreign Assets and Liabilities (2022, percent of GDP): - NIIP: 4.9 - Gross Assets: 106 - Debt Assets: 13 - Gross Liabilities: 101 - Debt Liabilities: 30 - External asset composition and dynamics: - External assets (106 percent of GDP) primarily comprised of reserve assets of the central bank and portfolio assets of NBFIs, dominated by GIPF. - Deterioration in external position since 2021 reduced net positive IIP from 17.6 percent of GDP in 2021 to 4.9 percent of GDP in 2022, driven by an 18 percent decrease in the value of external portfolio assets held by the GIPF. - Staff baseline NIIP outlook: "NIIP will turn negative starting in 2023, and deteriorate over the medium term" due to FDI-driven liabilities in the minerals sector and asset reductions to finance persistent CA deficits. - Main risks: (i) fiscal shocks (including lower SACU receipts); (ii) exposure of debt asset valuations to higher interest rates; (iii) potentially lower returns to equity assets. - Mitigants: (i) authorities’ commitment to advance ongoing fiscal consolidation; (ii) a large part of FDI liabilities expected to be in the form of equity; (iii) private external debt largely owed by mining companies to their parents. - Current Account background and assessment: - Historical CA path: narrowed to -4.4 percent of GDP in 2017, surplus of 2.8 percent of GDP in 2020, widened to -9.9 percent of GDP in 2021 and -12.8 percent of GDP in 2022. - Negative public savings: (3.2 percent of GDP). - EBA-lite estimates for 2022: - CA-Actual: -12.8 (percent of GDP) - Cyclical contributions (from model): (-)0.4 - COVID-19 adjustors: (-)0.01 - Additional temporary/statistical factors: (-)5.4 - Adjusted CA: -7.8 - CA Norm (from model): -3.9 - Adjusted CA Norm: -3.9 - CA Gap: -3.9 1.0 - o/w Relative policy gap: 3.5 - Elasticity: -0.3 - REER Gap (in percent): 13.3 -3.5 - Adjustments applied: one-off correction to SACU receipts (3 percent of GDP) and imports related to new mineral activity (2.4 percent of GDP: lithium 1.4 percent of GDP; petroleum products due to oil and gas exploration 1 percent of GDP). - Resulting adjusted CA deficit: -7.8 percent of GDP; gap relative to CA norm narrows to -3.9 percent of GDP, pointing to a REER overvaluation of 13.3 percent (Table 1). - Policy implication: public wage and SOE reform will contribute to an internal devaluation and support required REER depreciation by lowering and keeping input costs, including labor costs, competitive. - Real Exchange Rate (REER) - 2010–16 depreciation: 22 percent. - 2022 REER change: depreciated by 3.6 percent (y/y average); rand nominal depreciation 11.2 percent (y/y average); average REER difference widened by 5.8 percent. - January–September 2023: REER depreciated by 4.2 percent; rand depreciated by 11.1 percent in the same period; inflation eased to just above 5 percent for both countries. - EBA-lite REER model (CPI-based) suggests an undervaluation of 3.5 percent for 2022; inflation convergence in 2023 expected to reduce the estimated undervaluation. - Capital and Financial Accounts (flows) - 2021 financial inflows: 16.0 percent of GDP. - 2022 financial inflows: 14.2 percent of GDP. - FDIs in 2022: 8.3 percent of GDP, two thirds related to oil and gas exploration and mining inter-company lending. - NBFIs required to repatriate 45 percent of their assets contributed to lower net portfolio inflows. *NAMIBIA — INTERNATIONAL MONETARY FUND* ### 1.1 percent of GDP compared to 4.4 percent of GDP in 2021. Gross financing needs, following a large increase in 2021, ### 1namea2023002 - 1.1 percent of GDP compared to 4.4 percent of GDP in 2021. Gross financing needs, following a large increase in 2021, ### Gross financing needs, debt servicing, and assessment - Gross financing needs (GFN) remained elevated in 2022 due to: - repayment of the 2010 Eurobond; - increased debt servicing costs from higher interest rates; - financing needs of new mineral activity. - Assessment: - Volatility in international financial markets and lower equity returns could pose a risk to portfolio inflows. - Finalizing the implementation of the Central Securities Depository (CSD) would attract non-resident investments and expand sources of portfolio financing. - Accelerating reforms to improve competitiveness and diversification would help attract FDIs to non-resource intensive sectors and diversify sources of external funding. ### FX intervention and reserves level - End-2022 reserves and composition: - Gross international reserves: 4.5 months of imports or 22.2 percent of GDP. - Increase in reserves: USD 39.0 million or about 0.3 percent of GDP (moderate increase following a large one-off boost last year from the SDR allocation). - Significant inflows supporting reserves in 2022: - FDI flows: 8.3 percent of GDP. - External project and budget support borrowing by government: 1.5 percent of GDP. - Authorities’ actions: - Foreign exchange interventions consistent with reserves management to support the currency peg. - Assessment and medium-term outlook: - At 4.5 months of imports at end-2022, reserves were above IMF’s ARA metric minimum threshold of 3.9 months of imports estimated for Namibia. - Under staff’s baseline scenario, reserves are expected to increase in the medium term to 5 months of imports, staying within the ARA range. - Factors boosting reserves in 2023: - recovering SACU receipts; - FDIs to support the minerals sector; - one-off non-resident purchase of a brewery company. - Risks to reserves accumulation: - persistence or widening of the yield differential of government bonds with South Africa (Namibian yields trading lower for the first time in recent history) could increase pressure on short-term portfolio assets (significant outflows in first half of 2023 compared to last year); - adverse fiscal shocks; - lower-than-anticipated non-oil commodity prices, especially for diamonds; - slowdown in oil and gas exploration FDI. - Supporters of medium-term reserves accumulation: - ongoing fiscal consolidation; - continued strength in commodity prices; - sustained mining production (subject to upside risk from interest in battery metals and rare earth elements); - lower international petroleum and food prices. - Policy recommendation: economic diversification within a broader economic transformation strategy to mitigate risks. ### Sovereign risk and debt sustainability assessment (DSA) — summary findings - Overall assessment: - Namibia is at a moderate overall risk of sovereign stress. - Debt is expected to decline, but risks remain significant. - Medium-term liquidity risk: - GFN Financeability Module indicates medium-term liquidity risks are high, primarily due to persistently high GFN with a particular spike in 2025/26 coinciding with repayment of the 2015 Eurobond. - Authorities accumulating funds in external bond sinking fund to partially mitigate the 2015 Eurobond spike. - Mitigating factors: - large domestic institutional investor base; - market appetite for long-maturity debt instruments; - low share of foreign currency debt. - Policy imperative: - Implementation of planned medium-term fiscal consolidation and structural reforms aimed at boosting growth is crucial to manage medium-term risks of sovereign stress effectively. - Long-term assessment: - Long-term risks are moderate as new streams of oil and gas revenues start to come in. - Necessity to implement a strong natural resource management framework to avoid fiscal expansion driven by windfall income. ### Debt coverage, disclosures, and public debt structure - DSA coverage: - Coverage in this SRDSA is of the budgetary central government; consolidated general government debt figures are not yet available. - Local governments’ borrowing remains minimal: about 0.02 percent of GDP. - In December 2022, Namibia joined the Special Data Dissemination Standard (SDDS) and is working with the IMF’s Statistics Department to compile and disseminate data on General Government operations. - Public debt structure (FY 2022/23 highlights): - Domestic creditors held about 74 percent of public debt in FY 2022/23. - About 46 percent of external debt is issued in rand, reducing currency risk given the peg. - Large proportion of debt issued at longer maturities as part of government debt strategy to mitigate rollover risks and diversify maturity profile. - Instrument and maturity profile notes: - Recent issuances calibrated to avoid bunching; debt management strategy tuned to diversify maturities and mitigate rollover risk. ### Baseline fiscal projections and key statistics (selected table values preserved) - Public debt (Percent of GDP): - 2022: 68.7 - 2023: 66.2 - 2024: 67.1 - 2025: 66.8 - 2026: 66.5 - 2027: 66.3 - 2028: 66.3 - 2029: 66.0 - 2030: 65.9 - 2031: 65.7 - Change in public debt (Percent of GDP): - 2022: 0.4 - 2023: -2.5 - 2024: 0.9 - 2025: -0.3 - 2026: -0.3 - 2027: -0.2 - 2028: 0.0 - 2029: -0.2 - 2030: 0.0 - 2031: -0.1 - Contribution of identified flows (Percent of GDP): - 2022: -1.8 - 2023: -2.5 - 2024: 0.8 - 2025: -0.1 - 2026: -0.1 - 2027: -0.1 - 2028: 0.1 - 2029: 0.1 - 2030: 0.3 - 2031: 0.1 - Primary deficit (Percent of GDP): - 2022: 0.8 - 2023: -0.8 - 2024: 0.2 - 2025: -0.7 - 2026: -1.0 - 2027: -1.1 - 2028: -1.0 - 2029: -1.0 - 2030: -1.0 - 2031: -1.0 - Noninterest revenues (Percent of GDP): 2022: 30.4; 2023: 33.5; 2024–2031: 31.0–31.2 (shown as 31.0/31.2 in table). - Noninterest expenditures (Percent of GDP): 2022: 31.2; 2023: 32.6; 2024: 31.2; 2025: 30.3; 2026: 30.2; 2027: 30.1; 2028: 30.2; 2029: 30.2; 2030: 30.2; 2031: 30.2. - Automatic debt dynamics and components: - Automatic Debt Dynamics: 2022: -0.8; 2023: -1.1; 2024: 0.8; 2025: 0.6; 2026: 0.9; 2027: 1.1; 2028: 1.1; 2029: 1.1; 2030: 1.3; 2031: 1.2. - Real interest rate and relative inflation (Percent): 2022: 0.0; 2023: 1.3; 2024: 2.6; 2025: 2.4; 2026: 2.6; 2027: 2.7; 2028: 2.8; 2029: 2.8; 2030: 3.0; 2031: 2.9. - Real growth rate (Percent): 2022: -2.8; 2023: -2.3; 2024: -1.8; 2025: -1.8; 2026: -1.7; 2027: -1.7; 2028: -1.7; 2029: -1.7; 2030: -1.7; 2031: -1.7. - Gross Financing Needs (Percent of GDP) (selected years): - 2022: 23.6 - 2023: 21.8 - 2024: 23.0 - 2025: 28.4 - 2026: 23.7 - 2027: 20.2 - 2028: 21.2 - 2029: 22.2 - 2030: 21.0 - 2031: 22.1 - 2032: 23.9 - Of which: Debt Service (Percent of GDP): - 2022: 22.8 - 2023: 22.6 - 2024: 22.8 - 2025: 29.1 - 2026: 24.7 - 2027: 21.3 - 2028: 22.3 - 2029: 23.2 - 2030: 22.1 - 2031: 23.1 - 2032: 25.0 - Local vs foreign currency GFN (Percent of GDP): - Local Currency GFN: 2022: 20.9; 2023: 21.1; 2024: 20.8; 2025: 21.6; 2026: 22.8; 2027: 20.1; 2028: 21.0; 2029: 20.9; 2030: 21.5; 2031: 23.4. - Foreign Currency GFN: 2022: 1.9; 2023: 1.5; 2024: 2.0; 2025: 7.5; 2026: 1.9; 2027: 1.2; 2028: 1.2; 2029: 1.2; 2030: 1.1; 2031: 1.6. - Memo indicators: - Real GDP Growth (Percent): 2022: 4.3; 2023: 3.5; 2024: 2.8; 2025: 2.7; 2026–2031: 2.6. - Inflation (GDP Deflator; Percent): 2022: 7.3; 2023: 6.9; 2024: 4.7; 2025: 5.1; 2026: 4.7; 2027: 4.7; 2028: 4.4; 2029: 4.5; 2030: 4.5; 2031: 4.5. - Nominal GDP Growth (Percent): 2022: 11.8; 2023: 10.1; 2024: 7.5; 2025: 7.9; 2026: 7.5; 2027: 7.4; 2028–2031: 7.2. - Effective Interest Rate (Percent): 2022: 7.3; 2023: 8.1; 2024: 8.3; 2025: 8.3; 2026: 8.6; 2027: 8.6; 2028: 8.5; 2029: 8.9; 2030: 8.7; 2031: 8.4. ### Realism of baseline assumptions and fiscal outlook - Realism analysis: - Does not point to major biases except for medium-term primary balance and debt reduction, where an optimism bias is noted. - Bias partly due to increased SACU revenue following the Covid-19 slump and anticipated positive adjustment in FY 24/25 to account for under-disbursements in FY 22/23. - Staff commentary: - Over the medium term, implementation of authorities' fiscal consolidation plan, enhanced SACU revenue, and continued economic recovery are anticipated to lead to primary surpluses and set public debt on a declining path. ### Medium-term risk analysis and stress tests - Key indices and values: - Debt Fanchart terminal debt-to-GDP x institutions index: 36.9 (contribution 0.8 percent of GDP). - Debt Fanchart index (DFI): 1.9 — Risk Signal: Moderate. - Average baseline GFN: 23.1 percent of GDP (fanchart width 7.9 percent of GDP). - Banks' claims on general government: 16.2 (pct bank assets) with change in banks' claims in stress: 7.4 (pct banks' assets). - GFN financeability index (GFI): 15.6 — Risk signal: Moderate. - Medium-term index: (normalized combination) — Final assessment: Moderate. - Probabilities for 2023–2028: - Prob. of missed crisis, if stress not predicted: 27.3 pct. - Prob. of false alarms, if stress predicted: 17.0 pct. - Commentary: - Debt Fanchart and GFN Financeability Modules suggest moderate levels of risk. - Elevated risk could be offset by domestic investor base, appetite for long-term instruments, and minimal foreign currency debt. - Contingent liability stress test: debt level remains elevated but keeps downward path in medium term. - Generalized macro-fiscal shock indicates persistently high gross financing needs. ### Long-term risk analysis - Baseline long-term projections: - Under the baseline, GFN will remain elevated, staying above 20 percent of GDP through 2037. - Debt management: - Recent issuances calibrated to avoid bunching; overall debt management strategy aims to avoid rollover concentration. - Commentary: - Long-run projections and alternative baselines considered (medium-term extrapolations, baseline with debt-stabilizing primary balance, historical average assumptions) underscore that sustained consolidation and prudent resource revenue management are important to keep long-term risks moderate. *Source: IMF staff estimates and projections (extracted from the Namibia country DSA and annex).* ### Annex IV. Past Fund Advice ### Annex IV. Past Fund Advice ### Preserve Fiscal and Debt Sustainability - Goals/Objectives: - Enact fiscal adjustment measures to reduce the public debt-to-GDP ratio to a sustainable level while protecting the vulnerable. - Strengthen PFM and operationalize the newly established SWF, the Welwitschia Fund, (WF). - Actions/Measures: - Contain the wage bill, including by implementing the early retirement scheme. - Improve SOEs’ performance and management and divest from selected entities to reduce budgetary transfers. - Finalize the Public Asset Ownership Policy. - Mobilize tax arrears and one-off revenues, including by strengthening tax collection. - Protect the most vulnerable from the impact of higher food and fuel prices and address food security and poverty. - Adopt the PFM Bill (Amended State Finance Act). - Develop a comprehensive fiscal risk management framework. - Establish a strong governance and management framework for the WF. - Developments: - Wage bill growth was contained through natural attrition and below-inflation salary adjustments, however, the comprehensive wage bill reform, including early retirement, has been delayed. - SOEs have been brought under the finance ministry’s responsibility to strengthen their oversight and transfers to commercial public enterprises have been reduced. - Public Asset Ownership Policy has been drafted and is awaiting cabinet approval. - Namibia Revenue Authority is proactively receiving TA to increase efficiency of collection and improve administration, including operational oversight and compliance. Measures to enhance compliance have already contributed to increase revenues in FY 2022/23. - Budgetary provisions for social benefits were increased (from 4.2 to 4.5 percent of GDP) to counter the erosion of purchasing power due to higher fuel and food prices. - Amended State Finance Bill (PFM Bill) is planned to be presented to the Parliament in 2024. - PIMA TA is planning to support fiscal risk management to strengthen SOE fiscal risk monitoring and reporting. - WF has already been established, but rules governing deposits and withdrawals are yet to be decided and operationalized. ### Safeguard the Peg to the South African rand - Goals/Objectives: - Ensure the credibility of the peg to the South Africa rand. - Maintain an adequate level of reserves. - Actions/Measures: - Ensure broad alignment of the monetary policy rate (the repo rate) with the SARB. - Manage reserves to ensure consistency with the ARA threshold. - Developments: - BoN has been tightening monetary policy by increasing the repo rate in broad alignment with the SARB but with a negative interest rate differential of 50 basis points as of October 2023. - Additional Actions/Measures (continued): - Implement planned fiscal consolidation to boost reserves and bolster the credibility of the peg. - Prepare to raise the repo rate above SARB if downside risks materialize. - Additional Developments: - Improved fiscal position, including through public wage containment, recovery in SACU receipts, higher FDI and borrowing from AfDB helped maintain official reserves at 4.5 months imports at end-2022 (reserves increased to 4.7 months at end-September 2023). - Commitment to the peg and policy rate alignment with the SARB have been reiterated by the BoN. - Positive real repo rate has been restored. ### Strengthen the Resilience of the Financial Sector and Manage Macro-Financial Risks - Goals/Objectives: - Operationalize the newly established Financial Stability Oversight (FSMO) framework, including by allocating adequate resources to its capacity and toolkit development. - Expand Financial Inclusion: Improve access to credit, notably for SMEs and the most vulnerable. - Strengthen the AML/CFT Framework: Avoid grey listing by the Financial Action Task Force (FATF) and potential negative economic repercussions. - Actions/Measures: - Expand the macroprudential toolkit by adopting a framework for a countercyclical buffer (CCyB) and conducting a data-driven analysis for the adoption of debt service-to-income limits and updating the early warning indicators and stress testing. - Strengthen collaboration between the BoN and NAMFISA. - Develop the emergency liquidity assistance (ELA) framework. - Increase bankability of projects, including by ensuring banks have access to reliable credit history and collateral information through functional credit bureaus and digital databases. - Implement the steps identified in the action plan (informed by the Eastern and Southern Africa Anti-Money Laundering Group) to strengthen the AML/CFT legal framework and implementation capacity. - Developments: - TA has been received by the BoN to develop a growth at risk (GaR) framework as well as expand the macroprudential toolkit to include CcyB, still under consideration. - A crisis management and resolution management framework has been established with a core set of indicators for risk monitoring, but a full-fledged risk monitoring framework with a focus on early warning indicators and interconnectedness risks is under progress. - TA is planned to further develop ELA. - The Financial Institutions and Markets Act (FIMA), which would strengthen the collaboration between BoN and NAMFISA, is undergoing amendments. - Namibia Financial Sector Strategy (NFSS) has been launched with initiatives to increase bankability through SME credit schemes (Credit Guarantee Scheme, the Catalytic First Loss Venture Capital Fund and the Mentoring and Coaching Program) and assessment of virtual tools to expand financial inclusion. A follow-up strategy to the NFSS is prepared and will build on existing commitments to foster financial inclusion for MSMEs, youth, and women, and formalization of the informal sector. - All legal amendments to buttress the AML/CFT legal framework have been passed by parliament. ### Foster Sustainable and Inclusive Private Sector Led Growth - Goals/Objectives: - Diversify sources of economic growth. - Enhance productivity in sectors with high employment potential. - Increase private sector participation in the economy. - Ensure sound measurement of growth and other key economic and demographic indicators. - Actions/Measures: - Streamline business regulations and procedures, including by accelerating the implementation of one-stop e-services and simplifying procedures to start a business. - Reduce skill mismatches, including through skill audits and easing regulatory restrictions to hire skilled foreign workers. - Continue to strengthen governance and the anti-corruption framework to support private investment, including by subscribing to the EITI. - Address food insecurity, including through structural measures to increase the productivity and the resilience of the agriculture sector. - Developments: - An overarching strategy to engender sustainable and inclusive growth (Harambee Prosperity Plan II) builds on: i) diversifying sources of economic growth by attracting private investment in the green and blue economy; and ii) enhancing productivity in sectors with high employment potential, particularly agriculture. - Sizeable green hydrogen investments through private sector participation have been secured. The required renewable energy production over the medium term is expected to increase energy availability and reduce high energy input costs constraining diversification. - A partnership has been launched with the Harvard Growth Lab to identify potential sectors for investments toward boosting long-term competitiveness and growth in addition to identifying concrete policy actions to make the business environment more conducive toward private sector led growth. - Ongoing digitalization efforts in public institutions are facilitating the streamlining of business regulations, although more progress is needed. The finalization of the Namibia Investment Promotion and Facilitation Bill is expected to strengthen the investment framework. Skills audits are proposed as part of the Namibia Statistics Agency’s drive for a new survey. - Efforts are underway to join EITI. - Several initiatives are in place to address food insecurity, including the Food Bank, the Drought Relief and School Feeding Programs. Ongoing initiatives aim to boost the productivity and the resilience of agriculture, including the Namibia Agricultural Mechanization and Seed Improvement Project. - The 2023 Census will help update data underlying policy and business decisions. *Source: Annex IV–VI, “Past Fund Advice”, “Capacity Development Strategy”, and “Harnessing Mineral Discoveries and Green Energy for Economic Diversification” as provided in the supplied content.* ### 1. The authorities do not view these new projects, especially GHP, as stand-alone ### 1namea2023002 - 1. The authorities do not view these new projects, especially GHP, as stand-alone ### Overview - Authorities view new projects, especially the Green Hydrogen Project (GHP), as interconnected building blocks forming a “virtuous cycle” toward a new economy rather than stand-alone initiatives. - Inputs (sustainable energy production, components like blades for wind turbines, sand-resistant solar panels) and downstream consumption (hydrogen-powered trains, green-iron manufacturing) can each generate independent value-added and reinforce project feasibility. - Synergies could arise between green hydrogen and potential new gas production to scale hydrogen supply via interim blue hydrogen while renewable technology costs decline. ### A. Green Hydrogen Project (GHP) — objectives and scale - Namibia receives over 3,000 hours of sunlight annually; GHP plans solar farms jointly with wind turbines with a total capacity of 7GW to power electrolysis using desalinated water. - GHP envisions three “hydrogen valleys”: Karas (south), central region including Walvis Bay port, and Kunene (north). - GHP targets a production of 10–12 million tons of green hydrogen production by 2050. - Based on a joint study with GIZ, Hydrogen Atlas, and other partners, project design includes phased development and potential domestic electricity spillovers. ### Financing, ownership, and partnerships - SDG Namibia One (SDG) to raise funds from local and international investors; involves Namibia’s Environment Investment Fund, Dutch investment ventures, and the European Investment Bank (EIB) which concluded a letter of intent at COP27 for the raising of 500 million euros. - Germany provided a grant of 40 million euros for the pre-feasibility stage. - Hyphen partnership: a contract awarded for development of the southern corridor (SCDI) jointly with NamPower; announced capital investment of $10 billion could yield 300 thousand tons of hydrogen per year by 2030 with an electrolyzer capacity target of 3 GWs. - Government exercised option to take a 24 percent equity stake in the Hyphen Project financed by a 40 million euro grant via the SDG vehicle; future equity to be financed with a mix of concessional loans and additional grant funding. - An Implementation Authority Office to develop Namibia’s synthetic fuels industry will be established with grant funding from Invest International and the European Union. ### Cost, demand, and market dependencies - McKinsey estimates production in Namibia could cost as low as US$1.5/kg by 2030; current estimated global production cost is US$10–15/kg; US natural gas equivalent cited as US$2/kg. - Green Hydrogen Organization estimates initial cost in Namibia at US$1.73-2.30 per kg. - Industry note: current global green hydrogen cost is higher than gasoline (estimated at US$8–10 per unit). - Hydrogen Council estimate: demand for ammonia from Germany alone could be nearly 3 billion tons a year. - Commercial feasibility likely depends on European market commitments, especially political commitments from Germany and decarbonization legislation; in the absence of deep market structures (e.g., liquid trading and forward curves for green ammonia) projects like Hyphen may need external sovereign support. ### Complementary projects and independent value chains - Oshivela Green Steel Plant - Planned Africa’s first zero-emissions steel plant with an annual production capacity of 1million tons of pig iron; investment estimated at about US$30 million. - First phase (2024) planned annual output of 15 thousand tons of direct reduced iron. - Expected to avoid 27 thousand tons of carbon dioxide emissions per year, equivalent to 50 percent of emissions of Namibia’s entire energy production. - Oshivela plans to absorb part of green ammonia produced in Namibia. - Green Shipping Corridors - Joint project with Marsk Mc-Kinney Moller Center for Zero Carbon Shipping to map and fund carbon neutral value chains. - Partnership involves building a clean ammonia bunkering facility in Walvis Bay at a cost of more than 2.2 billion euros. - Green Hydrogen Locomotives (HyRail Namibia) - Led by Hyphen Technical to develop hydrogen fuel for rolling stock; conversion of two diesel-electric locomotives; development of hydrogen fuel storage car. - Prototypes built/adapted in Rosslyn, South Africa, then moved to Walvis Bay for operation by TransNamib. - Project estimated cost 7.6 million euros, partly funded from a share of the 30 million euros of grant funding made available by BMWK. - Port expansions - NamPort signed MoU with Port of Rotterdam (PoR) to position Namibia’s ports as green hydrogen export hubs; PoR anticipates demand of 20 million tons of hydrogen to pass through its port’s industrial complex by 2050. - NamPort allocated 350 hectares at the Port of Walvis Bay North Port for green hydrogen industries; development of a new deep-water port of Lüderitz at Angra Point will complement the North Port. - Lüderitz located 254 nautical miles south of the Port of Walvis Bay. - Netherlands provided grant funding for port master plan revision and will receive preferred status to develop the port for shipping green hydrogen. - Electricity surplus potential - According to the UN, a 10-percent increase in the capacity of renewable power installations could yield about 75 TWh/year of additional electricity, which is more than 20 times the total electricity consumed in Namibia today. ### B. Oil and Gas exploration — discoveries and timelines - Offshore exploration surge since 2021 concentrated in the Orange Basin, 270 km off the southwestern coast. - Five discoveries in less than two years bring estimated total size of reserves at 11 billion barrels. - Exploration led by Shell, Total and Qatar Energy in partnership with NAMCOR; NAMCOR is expected to take a 10-percent stake in the production sharing framework. - Final Investment Decision (FID) could be imminent in early 2024; appraisal and infrastructure development could take more than five years, making production unlikely before 2030. - Kudu field estimate: 3 trillion cubic feet of natural gas located 170 km offshore from Lüderitz Port. - NAMCOR June 2023 statement: prospective Kudu development intended to supply an onshore electricity plant with a conservative estimate of a 400 MW capacity as part of a joint project with BW Energy; negotiation of pricing between BW Energy and NamPower is important to manage cost recovery and fiscal risks. - Context: natural gas reserves in SSA amounted to over 620 trillion cubic feet. ### C. Lithium — opportunities and constraints - Global pickup in lithium battery demand has generated significant exploration activity in Namibia over the last two years; Namibia estimated to have significant deposits of lithium and rare earths. - Two mines acquired by new investors revitalizing operations toward large-scale production. - Government restricted exporting of unprocessed lithium to encourage local processing for higher value-added inputs. - Environmental concerns: pollution, disruption to natural habitats, impact on small communities; water constraints (noted in uranium production) present risk to scaling lithium production. - Market risks: alternative battery technologies and EV market dynamics could affect global lithium demand; these should be weighed before public investment commitments. ### D. Diversification prospects, risks, and necessary policy actions - New activities could bridge diversification but face pitfalls seen in past initiatives (textile and automobile experiences): miscalculation of input costs, logistical challenges, policy uncertainty, inadequate due diligence, and labor/productivity issues. - Current projects offer unique opportunities: significant resources, external market access, synergies, knowhow, and fungibility of inputs. - Energy competitiveness context: - Namibia imports 70 percent of its electricity from South Africa. - Imports involve a premium in the range of 9–12 cents per kWh compared to less than 8 cents for businesses in South Africa, eroding competitiveness. - Household access to electricity for lighting stands at below 50 percent. - Policy tradeoffs: - Local content requirements for petroleum can transfer knowledge but risk reinforcing rent-seeking and fierce tender competition. - Structural constraints (rigid input costs, logistical challenges, uncertain pricing dynamics) highlight need for accompanying reforms. - Green Industrial Policy (GIP) potential: - Investments in green hydrogen plus rare-earth processing for EV batteries can generate skills, value chains, and employment. - Staff-identified low-carbon technology transfer staircase: (i) adoption; (ii) diffusion; (iii) imitation; (iv) collaborative innovation; (v) indigenous innovation. - International “de-risking” interest presents an opportunity to lock market access for processed high-value products like processed lithium. ### Policy implications and recommendations (from text) - Preserve macroeconomic stability and continue macro-critical fiscal reforms. - Foster a climate conducive to entrepreneurship and innovation while streamlining the role of the state. - Continue upgrading necessary skills in the local workforce to support the virtuous cycle. - Ensure careful negotiation of commercial terms in gas-to-power projects (e.g., pricing between BW Energy and NamPower) to ensure cost recovery and limit fiscal risks. - Weigh environmental impacts and water constraints before scaling lithium and other mining projects. - Accompany large projects with measures to rectify structural constraints (energy costs, logistics, labor productivity, and policy certainty) to improve competitiveness and commercial feasibility. *Source: IMF staff summary of chapter on Namibia projects and diversification.* ### 16. For the above vision to succeed, a collaborative framework with the private sector is ### 16. For the above vision to succeed, a collaborative framework with the private sector is ### Public‑private collaboration and project sequencing - Investing in well‑sequenced and fungible projects in anticipation of emerging infrastructure, regulatory and human capital needs will help absorb their impact and ensure that if projects prove unfeasible, investments in fungible skills and infrastructure can benefit other endeavors through learning by doing. - Risk‑sharing with the private sector under a robust PPP framework and flexibility to revisit strategies based on outcomes will increase the probability of success while reducing fiscal risks. - Twinning local entrepreneurship with global businesses toward viable partnerships can provide know‑how and private sector investments into specific infrastructure upgrades. - The power sector is attracting Independent Power Producers (IPPs) through reforms including the horizontal consolidation of more than 70 distributors into five regional electricity distribution companies (REDs) and the establishment of transparent tariff setting by the Electricity Control Board (ECB). ### Addressing structural impediments to diversification (Fund staff perspective) - Macroeconomic prerequisites identified: - (i) reforming wage policy and SOEs to reduce input costs and address competitiveness; and - (ii) strengthening PFM and PPP frameworks to manage incoming large projects. - Addressing key structural constraints would help absorb large projects while generating positive spillovers for diversification. Key Structural Constraints (enumerated findings) - Business environment: further streamlining business regulation and facilitating start‑ups; ensure a predictable regulatory framework to foster private investment. - Skill mismatches: conduct a comprehensive skills audit; train the workforce to match emerging business needs; adopt frameworks matching emerging sectors with institutions of higher education; ease regulatory constraints for hiring skilled foreign workers. - Governance: improve accountability and transparency; strengthen anti‑corruption mechanisms, including progress in the Second National Anti‑Corruption Strategy and Action Plan launched in March 2022 and subscribing to the Extractive International Transparency Initiative (EITI). ### Other stakeholders’ diagnostics (World Bank‑IFC and UN) - Digital access: - Weak competition in the broadband market is keeping costs high; 1 gigabyte of data costs twice the average in South Africa. - Broadband adoption at 36 percent lags regional peers. - Logistics and trade: - Namibia is emerging as an alternative shipping hub to South Africa; Walvis Bay port is generating traffic from and to Botswana and DRC, including with re‑exports of petroleum products. - Enhancing timeliness, tracking, and tracing for international shipments, and investments to support green hydrogen export capacity through the Lüderitz port can facilitate trade more broadly. - Water: - Variable rain patterns and water pollution present acute challenges for the vulnerable and constraints to growth, including in existing uranium production and prospective lithium processing. - PPP water projects have recently been announced, including for wastewater treatment in Windhoek. - The private sector can foster innovative water solutions such as desalination, which can produce synergies with green hydrogen projects (GHP). ### Industrial policy targeting and stakeholder engagement - Authorities consulted the Harvard Growth Lab on optimal sectors for industrial policy; sectors identified were: chemicals and basic materials; food industry; machinery and electronics; metals, mining, and adjacent industries; and transportation and logistics. - The authorities also sought IMF advice and received input from other stakeholders, including the World Bank/IFC and the United Nations. ### Public wage premium, entrepreneurship, and implications for public wage reform (Annex VII) Findings - Namibia exhibits a public wage premium of 28 percent, notably higher than cross‑country averages reported in the literature (Abdallah et al. 2023 indicates public‑sector employees typically earn about 10 percent more in a broad cross‑country analysis). - Meta‑analysis figures reported: 5.2 percent for advanced economies, 13.3 percent for emerging market economies, and 14.8 percent for low‑income and developing countries. - Entrepreneurial activity in Namibia is much lower than predicted by its income level and is accompanied by elevated fear of failure. - Cross‑country panel analysis (49 countries, 2000–2019, unbalanced panel) suggests a strong negative correlation between public wage premium and entrepreneurship. Policy implications and recommendations (annex) - Reducing the public wage premium may encourage entrepreneurship but could reduce public sector efficiency; the premium attracts top talent and acts as a safeguard against shirking. - Recommended approach: do not eliminate the public wage premium but attenuate its effect by reducing the size of the public sector. - Streamline the public service to be leaner and more proficient while preserving or amplifying the wage premium justified by skill and productivity differentials. - Elevate qualification criteria for entry into the public sector (raise the talent threshold θt) to narrow access and encourage entrepreneurship. - Conduct a comprehensive skills audit to retain an efficient administrative cadre after streamlining. - Link compensation directly with skills and performance to reward competence and foster accountability. ### Occupational choice model (Supplement I) — mechanism and implications - Model features: - Public sector entry requires talent θ ≥ θt and offers a wage premium ν that depends on unionization η. - Private sector wage wpr(θ) is a function of talent θ. - Entrepreneurship requires initial capital K financed by own funds (1 − λ(θ))K and borrowed funds λ(θ)K, with λ(θ) < 1 and λ(θ) increasing in θ (talent‑dependent borrowing capacity). - Utility uses CRRA form U(ω) = ω(1−ρ)/(1−ρ), with ρ the coefficient of relative risk aversion. - Comparative conditions (expressed in model equations): - Public sector chosen if public utility ≥ private utility: (ωp(v(η),θ))1−ρ/(1−ρ) ≥ (ωpr(θ))1−ρ/(1−ρ). (Equation (1)) - Public sector chosen over entrepreneurship if (ωp(v(η),θ))1−ρ/(1−ρ) ≥ (π(θ) − I − (1 − λ(θ))K)1−ρ/(1−ρ). (Equation (2)) - Private sector chosen if (ωpr(θ))1−ρ/(1−ρ) ≥ (π(θ) − I − (1 − λ(θ))K)1−ρ/(1−ρ). (Equation (3)) - Effects of raising talent threshold θt: - A higher θt reduces the pool eligible for public sector employment, lowering public sector employment ceteris paribus. - Individuals with θ just below θt, who are excluded from public roles, will compare private sector utility and entrepreneurship utility; because λ(θ) increases with θ, high‑talent individuals can borrow more and may find entrepreneurship more feasible and attractive. - First‑order condition implications when θt rises: - The range satisfying conditions (1) and (2) shrinks, reducing the probability of choosing public employment. - Individuals just below θt will shift comparisons toward entrepreneurship; if (π(θ) − I − (1 − λ(θ))K)1−ρ/(1−ρ) > (ωpr(θ))1−ρ/(1−ρ), they will lean toward entrepreneurship. *Source: IMF staff chapter and Annex VII and Supplement I from the provided PDF content.* ### Annex VIII. Estimating a Tolerable Policy Rate Differential with ### Annex VIII. Estimating a Tolerable Policy Rate Differential with the SAB in the Context of the Peg to the South African Rand ### Summary - During the most recent tightening cycle, the Bank of Namibia (BoN) reflected the general direction of the SARB, resulting in 100 basis point tightening since the end of 2022, while keeping its repo rate below SARB by an average of 50 basis points. - The analysis estimates ranges of tolerable policy rate deviations that would not cause significant portfolio outflows under varying circumstances: - Under “normal circumstances”, a negative policy differential of -25 to -50 basis points is tolerable (with durations up to 31 days and 147 days respectively). - When conditions are permissive, the tolerable negative differential can increase up to -75 basis points for up to 12 days. - When conditions are less permissive for a negative differential, a positive policy differential of +50 basis points or above would be desirable to stabilize capital outflows. - Significant higher outflows are observed for the -25 and -50 basis point differential thresholds beyond 31 and 147 days respectively. - When maintained for more than 12 days at -75 basis points, estimated outflows increase by N$295 million daily. ### A. Historical Trends - Past 15 years of policy rate deviations from SARB ranged between -475 to 175 basis points. - Over the last 15 years, the Namibian 91-day government treasury bill yield was consistently higher than South Africa’s by a positive deviation of 25 to 225 basis points, except for trading about 12 basis points lower as of October 20. - Factors muting a clear correlation between policy deviations and capital flows: - Requirement for non-bank financial institutions (NBFIs) to hold at least 45 percent of their assets domestically. - A similar liquidity requirement for banks. - Relatively low share of non-resident holdings of domestic debt (less than 10 percent of overall portfolio assets). - Large share of resident investors with home bias and interest in peg stability. - Persistent excess liquidity in the banking system and lack of a functional inter-bank market; government paper and fiscal financing needs have driven yields. - Interest rate context: - Prime lending rate in Namibia is currently at 11.5 percent and is automatically set at 375 basis point above the BoN repo rate. - Mortgage rates on existing homes hover around 12.5 percent. ### B. Empirical Methods - Three empirical approaches were used to estimate tolerable policy differentials that would not induce significant gross portfolio outflows: 1. Series of t-tests comparing 0 deviation and NPRD episodes (negative policy rate differentials) ranging from -25 to below -100 basis points. 2. Threshold regression analysis (including versions with covariates). 3. Propensity Score Matching (PSM) with the same covariates as threshold regression. - Data notes: - BoN provided a database of daily commercial bank transactions and a database of quarterly portfolio flows used to estimate daily portfolio flows; direct observations of daily portfolio flows were not available. - Analysis focused on NPRD episodes to reduce bias from asymmetry between negative and positive deviations and to focus on gross outflows. ### C. Empirical Results and Key Statistics - T-tests: - At a differential of -100 basis points and below, estimated portfolio outflows exhibit a significantly higher distribution. - Implied tolerable deviation from t-tests: -75 basis points, but if maintained for more than 12 days would entail significantly higher outflows (within that threshold) by N$295 million daily. - Threshold regression: - Without covariates: at -75 basis points and below, portfolio outflows follow a different distribution with a significantly higher mean, implying a tolerable threshold of -50 basis points. - With covariates (gross reserves; liquidity; inflation differential with South Africa; CDS spread for South Africa; short- and long-term yield differential with South Africa for the 91- and 271-day instruments; money supply): tolerable negative policy differential drops to -25 basis points. - Thresholds and critical day counts reported: - -25: 31 days (+262) - -50: 147 days (+336) - -75: 12 days (+295mln)* - Propensity Score Matching (PSM): - When matching observations to control for endogeneity, a significant difference in outflows from 0 deviation was found at: - Negative deviations: -75 basis points. - Positive deviations: +50 basis points. - Interpretation: when conditions make a negative differential more likely (permissive conditions), tolerable threshold increases to -75 basis points; when conditions are less permissive, a +50 basis point positive differential would be needed to stabilize outflows. - Other quantitative observations: - 91-day yield premia: positive deviation of 25 to 225 basis points over last 15 years (except the October 20 observation). - Non-resident holdings of domestic debt: less than 10 percent of overall portfolio assets. - Correlation of 92-day yield responses to policy changes: 95 percent for SARB and 76 percent for BoN. ### D. Policy Implications and Considerations - Under normal circumstances, BoN could maintain a negative differential in the range -25 to -50 basis points without triggering significant portfolio outflows for limited durations (up to 31 days and 147 days respectively). - In permissive conditions (e.g., high reserve adequacy, negative inflation differential vs South Africa, higher South African risk premium), BoN could tolerate up to -75 basis points for up to 12 days before significantly higher outflows occur. - If conditions are less permissive for a negative differential, authorities should consider a positive differential of +50 basis points or more to stabilize capital flows. - Structural and regulatory constraints (45 percent domestic asset requirement for NBFIs, resident investor home bias, BoN bond characteristics) help limit portfolio outflows; potential changes to these capital flow measures should be carefully sequenced. - The repo rate’s transmission is constrained by excess liquidity and non-functional inter-bank market; South African yields currently attract excess liquidity irrespective of policy rate parity. ### E. Caveats and Risks - Results are based on historical data and may not reflect future market responses, as evidenced during the GFC when gross outflows doubled. - Current South African challenges (rand volatility, higher South African bond yields) could alter the relationship and compress the current positive difference in government debt yields, increasing pressure for Namibia to close the gap or move to a positive differential. - Yield responses appear more sensitive to SARB policy changes than to BoN policy changes, implying potential need for faster repo adjustments in Namibia under some scenarios. *Source: Annex VIII, "Estimating a Tolerable Policy Rate Differential with the SAB in the Context of the Peg to the South African Rand."* ### 3. The fifth national development plan (NDP5) centered the government’s development ### 3. The fifth national development plan (NDP5) centered the government’s development ### NDP5, Vision 2030, and planning context - NDP5 implemented through March 2022; NDP6 launched in June 2023 and is under development by the National Planning Commission (NPC). - Vision 2030 (set out in 2004) is the long-term framework and the foundation for seven five-year national development plans. - Government development efforts under NDP5 focused on four pillars: economic growth, human capital development, resilience to climate change and environmental sustainability, and good governance. - Two ruling SWAPO party plans—Harambee Prosperity Plans I and II—mostly overlap with NDPs 5 and 6, respectively. - Key structural challenges highlighted in the authorities’ policy framework: inequality, low density, and aridity. ### SDG monitoring, data, and financing frameworks - Namibia completed two Voluntary National Reviews (VNRs): in 2018 and 2021; the 2021 VNR tracks progress across all 17 SDGs (the 2018 VNR focused on four Goals). - The 2021 VNR highlights: potential to become an international logistics hub via infrastructure investment; progress in gender equality across multiple sectors; pandemic-related backsliding especially in education. - July 2022: a Namibian Data Portal was launched with values and NDP targets for several SDG indicators (not all indicators covered). - Namibia is one of 16 “pioneer countries” implementing an integrated national financing framework (INFF). NPC conducted a development financing assessment suggesting good performance on domestic resource mobilization. - Revenues reached 30.4 percent of GDP in 2022–23 and are projected to increase to 31.2 percent of GDP by 2028/29. - Authorities seek to supplement revenues by drawing on the country’s pension fund, strengthening public-private partnership policy, issuing domestic financing instruments, and mobilizing external resources. ### SDG performance summary and inequality - Namibia outperforms EMEs and SSA peers in SDG5 (gender equality), SDG14 (sustainable use of marine/ocean ecosystems), and SDG15 (sustainable use of terrestrial ecosystems). - Namibia lags EMEs and SSA by a large margin on SDG goal of reducing inequality (consistent with documented striking inequities). - SDG index used ranges from 0 to 100 (worst to best performance). ### SDG costing methodology and benchmarking - Uses IMF’s SDG costing methodology developed by Gaspar et al. (2019); additional annual spending in 2030 is assessed relative to a baseline of today’s spending, expressed in percentage points of GDP. - Expenditures and inputs refer to public plus private resources/inputs together unless otherwise specified. - Namibia’s 2030 target levels benchmarked to current levels of strongly performing peers and established good practices, informed by 2030 projections of population size, rural-urban composition, age distribution, and GDP. - Primary comparator groups for descriptive analysis: Sub-Saharan Africa (SSA); SACU members (Botswana, Eswatini, Lesotho, Namibia, and South Africa); and emerging market economies (EMEs). - For social sectors’ costing benchmarks, well-performing peers are those with: i) GDP per capita between US$4,000 and US$7,000 (Namibia’s projected 2030 GDP falls within this range); and ii) SDG3 and SDG4 index values above 79 and 92, respectively. ### Estimated additional annual spending needed by 2030 (summary) - Total additional annual spending required to make substantial progress in selected SDG sectors: about 6.5 percent of GDP by 2030. - Namibia’s additional spending is slightly above the median EME of 6.2 percent of GDP. - Relative to EMEs: additional spending in Namibia is lower in social sectors and higher in infrastructure sectors. ### Sector-level findings and additional spending estimates (percent of GDP) - Health - Current total healthcare spending: 9.3 percent of GDP. - Estimated additional spending required in 2030: 0.8 percent of GDP (to support a larger medical workforce and deliver better outcomes). - Note: Without substantial efficiency gains and some wage discipline, additional spending needs would be correspondingly higher. - Education - Current education spending: 10.6 percent of GDP. - Well-performing peers spend on average: 6.6 percent of GDP. - Gross enrollment in primary and secondary levels is already above 100 percent. - Key needs: reduce class sizes and improve participation in early childhood education. - Potential: heavy reprioritization and spending-efficiency gains could imply Namibia could spend 2 percent of GDP less in 2030 than today while achieving SDG4; without efficiency improvements, additional spending would be required. - Wages in education are noted as nearly 4 times average income. - Water, Sanitation, and Hygiene (WASH) - Basic sanitation access: 35 percent of population. - Open defecation: 47 percent of population still practicing. - Additional annual spending required in 2030: 1.8 percent of GDP (including maintenance/depreciation). - Constraints: low population density and informal settlements increase per-capita costs. - Electricity - Electricity access: 50 percent of the population. - Electricity consumption projected to rise from 4.4 to 11.3 TWh by 2030 to meet SDG7 targets (large share due to reaching the other half of population currently without access). - Additional annualized cost in 2030: 2.6 percent of GDP (including depreciation). - Most electricity generation is renewable (primarily hydropower and solar); current heavy reliance on imported electricity may not be sustainable. - Roads - Rural population access to all-season roads: 72.5 percent. - Additional annualized spending in 2030 required to ensure 90 percent rural access: 3.3 percent of GDP. - Infrastructure to build: an additional 9.8 thousand kilometers of mostly gravel roads, focused on connecting households and facilities (schools, clinics). ### Composition of additional spending and comparative notes - Largest contributors to additional spending: rural roads access (largest), followed by electricity access. - Under assumption of convergence to well-performing peers’ spending efficiency: - SDG4 (education) could be achieved by spending better rather than spending more, given current expenditure well above peers. - The estimated total additional annual cost of achieving the selected SDGs in Namibia is among the lowest of countries with similar in-depth costing analyses, despite appearing large in absolute terms. ### Sensitivity to efficiency assumptions and scenarios - Baseline assumption: Namibia raises its efficiency in transforming inputs into outcomes to levels of well-performing peers. - If efficiency gains do not materialize: - Additional spending to achieve SDG3 would be 4.9 percent of GDP (instead of baseline 0.8 percent of GDP). - Additional spending to achieve SDG4 would be 1.8 percent of GDP (instead of baseline -2.0 percent of GDP). - Timing and path considerations: - The Annex does not prescribe a specific time path to reach additional expenditures by 2030; policymakers can choose gradual, frontloaded, or backloaded trajectories. - To sustain SDG levels after 2030: social-sector spending would need to recur; infrastructure spending must cover depreciation and keep up with population and GDP growth. ### Financing options highlighted for further analysis - Future detailed work could explore financing via: - (i) more vigorous domestic revenue mobilization (revenue administration and tax policy measures and structural reforms), - (ii) grants, - (iii) concessional loans, - (iv) expenditure reallocation and increasing efficiency, - (v) strengthening the business environment to enable private financing. - IMF study of four case countries (Rwanda, Nigeria, Pakistan, Cambodia) found these steps (i), (iv), and (v) could cover 33, 35, 57, and 100 percent, respectively, of their SDG financing needs (potentially with delays past 2030), indicating significant international development assistance may be required for some countries. *Source: IMF staff analysis in the Annex on SDG costing and performance (Namibia).* ### 12. Beyond spending to achieve SDGs, managerial and policy constraints need to be ### 12. Beyond spending to achieve SDGs, managerial and policy constraints need to be addressed, and lessons for future risks can be drawn from COVID-19 and the impact of climate change. ### SDG spending, efficiency, and sectoral constraints - The estimates assume Namibia would be able to combine different inputs efficiently to deliver across the analyzed sectors; achieving this outcome would require important reforms. - Health sector: - The pandemic has strained Namibia’s health systems and exposed the criticality of making the system resilient to future health shocks. - Education sector: - Wage restraint combined with a stronger reorientation of public resources to early childhood education can be expected to improve learning outcomes at later years without additional outlays. - Water and sanitation sector: - Climate change will call for resilient infrastructure alternatives along with more efficient use of existing water. - Electricity sector: - Authorities are considering some diversification to other renewable sources, given the potential vulnerability of hydropower facilities to climate-change-induced drought in the decades to come, and in light of the highly favorable environment for wind and solar energy. - Road infrastructure: - Investments for making roads climate-resilient can be concentrated on the far north-east area of the country near the Zambezi River, where the threat of floods is highest. ### Key IMF–Namibia financial and institutional facts - Membership Status: - Joined: September 1990, Article VIII - General Resources Account (SDR Million): - Quota 191.10 100.00 - IMF holdings of currency 382.10 199.95 - Reserve position in Fund 0.15 0.08 - SDR Department (SDR Million): - Net cumulative allocation 313.55 100.00 - Holdings 179.33 57.19 - Outstanding Purchases and Loans (SDR Million; %Quota): - Emergency Assistance (RFI 2021) 191.1 100 - Latest Financial Commitments — RFI: - Type RFI; Date of Commitment 3/31/2021; Date Drawn/Expired 4/6/2021; Amount Approved (SDR Million) 191.10; Amount Drawn (SDR Million) 191.10 - Projected Payments to the IMF (SDR Million; based on existing use of resources and present holdings of SDRs) — Forthcoming: - 2023 Principal: [blank] - 2024 Principal: 47.78 - 2025 Principal: 95.55 - 2026 Principal: 47.78 - Charges/Interest: 2023 3.90; 2024 14.86; 2025 10.69; 2026 6.29; 2027 5.55 - Total: 2023 3.90; 2024 62.64; 2025 106.24; 2026 54.07; 2027 5.55 ### Exchange rate and Article IV consultation - Exchange Rate Arrangement: - The currency of Namibia is the Namibian dollar. - The de facto and de jure exchange rate arrangement is classified as “conventional peg”, vis-à-vis the South African rand. - The Namibian dollar is pegged at par with the rand. - Namibia is a member of the Common Monetary Area (CMA) and the CMA agreement establishes the fixed exchange rate arrangement. - Article IV Consultation: - Namibia is on a standard 12-month consultation cycle. - The last Article IV consultation was concluded by the Executive Board on December 7, 2022. ### Safeguards assessment and central bank practices - A first-time safeguards assessment of the BoN, conducted in connection with the Rapid Financing Instrument (RFI) approved by the Executive Board on April 12, 2021, was completed in March 2023. - The assessment found relatively well-established safeguards, including audit mechanisms and financial reporting practices that broadly follow international standards. - Recommendations and follow-up: - BoN strengthened foreign reserves management practices, including approving a project plan to modernize operations, enhancing reporting to the Board, and ensuring the BoN has unconditional access for balance of payment purposes to the assets as part of the swap agreements with domestic public entities. - The BoN Act’s provisions on autonomy could also be further strengthened to align with leading practices. ### IMF capacity development (TA and training) — focus areas and recent activities - Principal TA and training areas provided to Namibia: - Public financial management (PFM) - Tax and customs administration - Financial supervision and regulation - Liquidity management - Macroprudential policies - Cyber risk regulation and supervision - AML/CFT legal drafting - Macroeconomic modelling capacity - Macroeconomic statistics - Fiscal Affairs Department (FAD) focus: - Strengthening public financial management, notably the budgetary process, project selection and management of fiscal risks; tax and customs administration, including the establishment of a national revenue agency; and tax policy. - Monetary and Capital Markets Department (MCM) focus: - Banks and non-banks financial institution stress testing capacity, including for the insurance system, banking supervision and regulation, macroprudential policies and cyber risk management. - Institute for Capacity Development (ICD): - Launched in 2021 a multi-year macroeconomic frameworks TA project with the Bank of Namibia to improve economic analysis and forecasting capabilities, streamline the decision-making process, and strengthen the monetary policy communication strategy. - TA delivery has focused on macroeconomic forecasting capacity, including nowcasting. - Statistics Department (STA) priorities: - Enhancing the quality of sectoral macroeconomic statistics as well as updating the consumer price index (CPI), developing the producer price index (PPI), Financial Soundness Indicators (FSI), and supporting Namibia’s progress in the implementation of the international statistical standards. - Legal Department (LEG) TA in 2023: - Strengthening of the legal framework for the AML/CFT architecture and operationalization of the bank resolution framework to strengthen financial crisis management. ### Selected TA and capacity-development activities (recent years — illustrative entries) - 2023 FAD: Review of organizational structure of MoF; Customs induction training; Tax administration - Audit; PFM - Budget preparation & management; SDG costing; Customs Administration Performance Management; Customs Administration - Risk management and training & development. - 2022 FAD: Customs procedures; Tax administration - Business process review; Tax revenue administration - Executive development; Customs Administration - BCP; Governance of extrabudgetary entities; FADPFM - SDG budgeting; FADEP - SDG costing; PFM legal framework reform; SDG Costing; Mid-term Budget Review. - MCM and ICD examples (2021–2023): Central Bank Digital Currency; Cyber Risk Regulation and Supervision; Financial crisis management - bank resolution framework; Banking Regulation and Supervision - Risk-based Supervision (RBS) framework; Macroprudential Policies; Macroeconomic Frameworks TA – Building a Quarterly Projection Model (QPM); Macroeconomic Frameworks TA – Near-term Forecasting of Inflation and Nowcasting of GDP. - STA examples (2019–2023): Government Finance Statistics; Balance of Payments Statistics; National Accounts Real Sector; Development of PPI; Consumer Prices/Producer Price; Financial Soundness Indicators; Rebasing CPI and developing PPI. ### Statistical issues and data adequacy for surveillance (as of October 30, 2023) - General assessment: - Data provision has shortcomings but is broadly adequate for surveillance. - Most important shortcomings concern the coverage of fiscal accounts, recording of imports and financial flows related to oil exploration activity in national accounts and external sector statistics, producer price statistics, and some consistency issues in external sector statistics. - National accounts: - Base year for national accounts (NA) is 2015. - NSA compiles and disseminates quarterly GDP by production approach in current and constant prices, with one-quarter timeliness. - Compiled and disseminated data for GDP meet the Special Data Dissemination Standard (SDSS) requirements for coverage, periodicity, and timeliness. - NA are produced bi-annually and revised for the past three years. - NSA started tracking the oil and gas exploration activity in the quarterly data, but not yet in the annual data. - Price statistics: - CPI data disseminated 15 days after the reference month. - CPI weights are based on expenditures data from the 2009/10 Household Income and Expenditure Survey (HIES) and are severely outdated; the 2015/16 HIES were deemed unusable. - A new HIES is planned for 2024/25. - Producing and expanding PPI coverage with AFRITAC South assistance. - Labor market data: - Labor market data, including labor force, employment, and wages are only collected on a bi-annual basis (the latest annual labor force survey is for 2018). - Government finance statistics: - Annual and monthly budgetary central government data by fiscal year are compiled on a cash basis in GFSM 2014 format. - Progress has been made to compile annual general government operations. - Monetary and financial statistics (MFs): - BoN reports monthly monetary statistics based on SRFs for the BoN and Other Depository Corporations. - BoN started to report Other Financial Corporations data since December 2017. - Financial Soundness Indicators: - BoN reports FSIs for banks on a quarterly basis; FSIs do not currently cover nonbank financial institutions or other nonfinancial sectors. - Balance of payments and IIP: - BoN reports BOP and IIP data on a quarterly basis (with a lag of one quarter for the IIP) following BPM6. - BoN is in the process of collecting disaggregated data on the recently intensifying oil and gas exploration activity; once fully processed, net IIP and current account are expected to undergo a significant revision. - Data standards: - Namibia subscribed to the Special Data Dissemination Standards (SDDS) in December 2022. - Data ROSC was published in 2002 and updated in 2005. ### Common Indicators Required for Surveillance (as of October 30, 2023) — selected latest observations and reporting frequency - Exchange rates: Date of Latest Observation Oct 2023; Date Received Oct 2023; Frequency of Data D; Frequency of Reporting D; Frequency of Publication D - International reserve assets and liabilities of monetary authorities: Date of Latest Observation Oct 2023; Date Received Oct 2023; Frequency M M M - International investment position: Date of Latest Observation Q2/ 2023; Date Received Oct 2023; Frequency Q Q Q - Reserve/base money: Latest Sep 2023; Received Oct 2023; Frequency M M M - Broad money: Latest Sep 2023; Received Nov 2023; Frequency M M M - Central bank balance sheet: Latest Sep 2023; Received Oct 2023; Frequency M M M - Consolidated balance sheet of the banking system: Latest Sep 2023; Received Nov 2023; Frequency M M M - Interest rates: Latest 10/30/2023; Received 10/30/2023; Frequency D D D - Consumer price index: Latest Sep 2023; Received Oct 2023; Frequency M M M - Revenue, expenditure, balance, and composition of financing—general government: NA NA - Revenue, expenditure, and balance—central government: Latest Sep 2023; Received Oct 2023; Frequency M M M - Stocks of central government and central government-guaranteed debt: Latest Jun 2023; Received Aug 2023; Frequency Q Q Q - External current account balance: Latest Q2/ 2023; Received Sept 2023; Frequency Q Q Q - Exports and imports of goods: Latest Q2/ 2023; Received Sept 2023; Frequency Q Q Q - GDP/GNP: Latest Q2/ 2023; Received Sep 2023; Frequency Q Q Q - Gross external debt: Latest Q2/ 2023; Received Sept 2023; Frequency Q Q Q *Prepared By African Department in collaboration with other departments and the World Bank* --- _Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1namea2023002.pdf_