## 6. The analysis of social spending can be anchored in three interrelated dimensions: fiscal ## Source details **Canonical URL:** [6. The analysis of social spending can be anchored in three interrelated dimensions: fiscal](https://www.imf.org/-/media/files/publications/selected-issues-papers/2026/english/sipea2026059.pdf) ## Other formats - [Markdown version](/-/media/files/publications/selected-issues-papers/2026/english/sipea2026059.pdf.md) - [Structured JSON version](/-/media/files/publications/selected-issues-papers/2026/english/sipea2026059.pdf.json) --- ### Framework and key dimensions - Social spending analysis anchored in three interrelated dimensions: - Fiscal sustainability: assess social spending within a credible medium-term fiscal framework to ensure outlays are consistent with debt sustainability and macroeconomic stability. - Spending adequacy: evaluate relative to country-specific circumstances (level of development, demographic and social needs, existing coverage gaps) with focus on effective access to basic education, essential health services, and social protection for vulnerable groups. - Spending efficiency: assess extent to which resources translate into intended social outcomes, considering program design, targeting, implementation capacity, and governance. - Strengthening efficiency is described as a critical lever to enhance social outcomes while preserving fiscal space and supporting inclusive and sustainable growth. ### Fiscal sustainability and fiscal space in Namibia - Durable social outcomes require spending credibly financed without undermining macroeconomic stability; spending that outpaces revenue capacity or is financed by persistent deficits and rising debt can become procyclical and ultimately unsustainable. - Namibia-specific fiscal facts and trends: - Social spending amounted to 56 percent of total non-interest expenditure in FY2024/25. - Central government capital spending has declined to around 3 percent of GDP. - Fiscal space has shrunk against the backdrop of elevated social and other current spending; the period of elevated spending has coincided with persistent fiscal deficits and rising public debt. - Elevated current spending and limited revenue growth and high expenditure rigidities risk further debt accumulation or crowding out priority investment and countercyclical policy capacity. ### Education: adequacy, composition, and efficiency - System characteristics and challenges: - Education system comprises pre-primary, primary, and secondary education with academic and technical streams, growing technical and vocational training and tertiary sector. - Structural constraints include low population density and geographic dispersion, increasing cost of service delivery and complicating equitable access. - Elevated youth unemployment: 44.4 percent. - Skill mismatches noted (UNICEF, 2017), implying challenges in school‑to‑work transitions. - Public spending patterns: - Education currently absorbs roughly one-quarter of total government expenditure. - Most expenditures allocated to recurrent items, notably wages; recurrent spending on personnel and operational costs dominates, potentially at the expense of infrastructure, teaching materials, and targeted programs. - Rapid population growth is increasing demand pressures on the education system. - Allocation across levels: - Education spending exceeds peer countries both as a share of GDP and as a share of total public expenditure. - Spending on tertiary education exceeds the emerging market economies (EMEs) average; spending on primary and secondary education is below (but comparable with the sub-Saharan African (SSA) average). - Teacher–student ratio in primary and secondary education remains below the EME averages, consistent with comparatively lower spending per student at these levels. - Namibia’s prioritization toward tertiary education may come at expense of resources per student at lower levels. - Outcomes and efficiency: - Primary enrollment rates are significantly higher than peers; secondary school enrollment falls below peers. - School completion rates remain below the EME average; repetition rates are above, even exceeding the SSA average. - Namibia compares favorably in reading skills but falls below the SSA average in math. - Education spending efficiency gap: - Has edged up slightly over the past two decades. - Remains high among SACU countries and compared with EMs. - Measured using a stochastic frontier analysis (range 0-1, lower number=higher efficiency) benchmarking enrollment, completion, years of schooling, literacy, pupil–teacher ratios, harmonized learning outcomes. ### Health: adequacy, composition, and delivery challenges - System characteristics and challenges: - Namibia operates a dual health system: public system serves over 80 percent of the population; private sector employs a disproportionately large share of health care professionals. - Low population density raises delivery costs and exacerbates disparities in access. - Namibia continues to face high burdens of communicable and non-communicable diseases, including HIV and tuberculosis. - Public health spending facts: - Public health expenditure accounts for about 15 percent of total government spending, or 5.5 percent of GDP in 2023. - Composition is heavily concentrated in current spending: - Wage costs—and overtime payments in particular—are a major source of budget overruns, especially post‑COVID-19. - Limited capital investment and under provision of quality‑enhancing inputs, which have represented less than 1 percent of total spending in recent years. - Adequacy relative to needs and peers: - At comparable levels of GDP per capita, Namibia ranks among the highest in government health spending, both in per capita terms and as a share of total government expenditure. - IMF estimates additional financing required to close health-related Sustainable Development Goal (SDG) gaps: approximately 1.4 percent in 2030 as a percent of 2030 GDP. - Health input indicators (availability of health workers and hospital beds) are higher than SSA averages but below EME averages and unevenly distributed, with a large share of health professionals concentrated in the private sector. ### Health outcomes, financing architecture, and reforms - Health outcomes and trends: - Healthy life expectancy stood at 52.8 years in 2021, below both the SSA and middle-income country averages of 54.9 and 62.4 years, respectively; and had declined from earlier highs, partly reflecting COVID-19 disruptions and underlying structural challenges that predate the pandemic (WHO, 2024). - Infant mortality and life expectancy indicators are weaker than those of emerging market peers. - Health spending is comparatively high relative to regional and income group peers, yet outcomes remain below those achieved by some peer countries at comparable spending levels. - Financing architecture, fragmentation, and reforms: - About a quarter of government health spending is used to subsidize the Public Service Medical Aid Scheme (PSEMAS), an insurance scheme for civil servants and their dependents, which covers only 12 percent of the population and allows access to both private and public health care services (UNICEF, 2022). - PSEMAS financing composition: - Largely financed through government contributions, accounting for over 75 percent of total funding, with the remainder funded through employee contributions at a flat-rate as a percentage of earnings (UNICEF, 2022). - Creates a two-tier system in which civil servants can access private care while most of the population relies on tax-funded public services. - Health spending has become increasingly concentrated in hospitals and clinical and curative care, accounting for over 70 percent of the MoHSS budget. - Key reform milestones and measures: - October 2025: Adoption of the UHC Policy and the Ministry of Health and Social Services Strategic Plan for 2025/26–2029/30, targeting expanded access, improved quality, and strengthened governance. - April 2026: Launch of the Vision April 2026 initiative, which requires civil servants to seek inpatient care in public facilities, with PSEMAS reimbursements reinvested into the public system. - Complementary measures include infrastructure upgrades, workforce expansion, improved medical equipment procurement, and electronic billing and IT systems. - Reform objectives: consolidate risk pooling, reduce financing fragmentation, and strengthen the link between health spending and service delivery. - Implementation risks: facility readiness, referral systems, and administrative capacity. ### Health spending efficiency and drivers of outcome gaps - Health spending efficiency and gaps: - Namibia’s estimated efficiency levels have increased slightly over the past two decades and are broadly comparable to those of other SACU members, but remain lower than emerging market peers; improvements over time have been gradual. - The estimated efficiency gap indicates that, at existing spending levels, health outcomes are below those achieved by some peer countries. - The SFA (stochastic frontier analysis) framework: - Primary input: public health expenditure per capita in constant 2021 PPP dollars, smoothed using a five‑year moving average. - Outputs: measures of healthcare capacity (such as physicians per capita) and health outcomes (including life expectancy and infant mortality), incorporated jointly through a multi‑output distance function. - Further methodological details referenced in IMF Fiscal Monitor 2025 Chapter 1 Online Annex. - Drivers of outcome gaps and system constraints: - Systemic allocation choices that may reduce effectiveness: - Financing fragmentation (PSEMAS concentration). - Concentration of spending on curative care and hospitals rather than primary and preventive care. - Structural cost factors: - Low population density and geographic dispersion raise service delivery costs and constrain equitable access. - Documented weaknesses: budget execution, inter-regional resource allocation, procurement, pharmaceutical management, and hospital productivity (World Bank, 2019). ### Social protection and interactions with health - Social assistance spending is around 3 percent of GDP, exceeding averages of comparison groups and reflecting a strong policy commitment to redistribution. - Namibia’s social assistance system covers many vulnerabilities, using programs that are generally not income- or means-tested (Box 2 lists Old Age Grant, Disability Grant, Child Grants, Veterans’ Grant, Conditional Basic Income Grant, National Drought Relief Program). - Evidence from SPLAT (using 2015/16 household survey data) suggests Namibia’s social assistance system reduces the simulated poverty gap and headcount more than the median EME and mean SSA, conditional on total social assistance spending levels. - Coverage and targeting challenges: - Coverage of social assistance programs remains moderate with a sizable share of the poor not reached. - Benefit incidence accruing to the poorest 20 percent is below that observed in several EMEs and OECD countries. - The Old Age Grant—large share of social assistance spending—shows lower benefit and beneficiary shares for the poorest and higher shares for the richest compared with the median EME and mean SSA. ### Policy implications and priorities - Anchor social spending assessments in a credible medium-term fiscal framework to maintain debt sustainability and macroeconomic stability. - Given constrained fiscal space, prioritize spending efficiency to achieve intended social outcomes within tight fiscal constraints. - Education sector priorities: - Examine and rebalance allocative choices across education levels (tertiary versus primary/secondary) and between recurrent and capital spending. - Improve relevance and alignment of education programs with labor market needs to strengthen school‑to‑work transitions. - Targeted examination of factors constraining secondary enrollment. - Rebalance composition of spending across education levels and between wage-heavy recurrent outlays and quality-enhancing inputs. - Address repetition and dropout rates and strengthen school-level performance monitoring. - Health sector priorities: - Shift spending toward primary and preventive care and frontline service delivery (infrastructure, equipment, workforce deployment). - Address recurrent-cost pressures (wage and overtime management) and rebalance toward capital investment and quality‑enhancing inputs. - Consolidate risk pooling by redirecting PSEMAS beneficiaries toward public facilities (phased approach under Vision April 2026). - Tackle uneven distribution of health professionals between public and private sectors to improve equitable access. - Address implementation risks: facility readiness, referral systems, and administrative capacity. - Social assistance priorities: - Strengthen targeting mechanisms and expand effective coverage of the most vulnerable. - Redirect savings from improved targeting toward better coverage without crowding out other priorities. - Fiscal framework: - Improve spending efficiency to help anchor public spending within a credible medium-term fiscal framework, support debt sustainability, preserve room to respond to shocks, and secure priority investments. *Source: sipea2026059* ### 6. The analysis of social spending can be anchored in three interrelated dimensions: fiscal ### sipea2026059 - 6. The analysis of social spending can be anchored in three interrelated dimensions: fiscal ### Framework and key dimensions - Social spending analysis anchored in three interrelated dimensions: - Fiscal sustainability: assess social spending within a credible medium-term fiscal framework to ensure outlays are consistent with debt sustainability and macroeconomic stability. - Spending adequacy: evaluate relative to country-specific circumstances (level of development, demographic and social needs, existing coverage gaps) with focus on effective access to basic education, essential health services, and social protection for vulnerable groups. - Spending efficiency: assess extent to which resources translate into intended social outcomes, considering program design, targeting, implementation capacity, and governance. - Strengthening efficiency is described as a critical lever to enhance social outcomes while preserving fiscal space and supporting inclusive and sustainable growth. ### Fiscal sustainability and fiscal space in Namibia - Durable social outcomes require spending credibly financed without undermining macroeconomic stability; spending that outpaces revenue capacity or is financed by persistent deficits and rising debt can become procyclical and ultimately unsustainable. - Namibia-specific fiscal facts and trends: - Social spending amounted to 56 percent of total non-interest expenditure in FY2024/25. - Central government capital spending has declined to around 3 percent of GDP. - Fiscal space has shrunk against the backdrop of elevated social and other current spending; the period of elevated spending has coincided with persistent fiscal deficits and rising public debt. - Elevated current spending and limited revenue growth and high expenditure rigidities risk further debt accumulation or crowding out priority investment and countercyclical policy capacity. ### Education: adequacy, composition, and efficiency - System characteristics and challenges: - Education system comprises pre-primary, primary, and secondary education with academic and technical streams, growing technical and vocational training and tertiary sector. - Structural constraints include low population density and geographic dispersion, increasing cost of service delivery and complicating equitable access. - Elevated youth unemployment: 44.4 percent. - Skill mismatches noted (UNICEF, 2017), implying challenges in school‑to‑work transitions. - Public spending patterns: - Education currently absorbs roughly one-quarter of total government expenditure. - Most expenditures allocated to recurrent items, notably wages; recurrent spending on personnel and operational costs dominates, potentially at the expense of infrastructure, teaching materials, and targeted programs. - Rapid population growth is increasing demand pressures on the education system. - Allocation across levels: - Education spending exceeds peer countries both as a share of GDP and as a share of total public expenditure. - Spending on tertiary education exceeds the emerging market economies (EMEs) average; spending on primary and secondary education is below (but comparable with the sub-Saharan African (SSA) average). - Teacher–student ratio in primary and secondary education remains below the EME averages, consistent with comparatively lower spending per student at these levels. - Namibia’s prioritization toward tertiary education may come at expense of resources per student at lower levels. - Outcomes and efficiency: - Primary enrollment rates are significantly higher than peers; secondary school enrollment falls below peers. - School completion rates remain below the EME average; repetition rates are above, even exceeding the SSA average. - Namibia compares favorably in reading skills but falls below the SSA average in math. - Education spending efficiency gap: - Has edged up slightly over the past two decades. - Remains high among SACU countries and compared with EMs. - Measured using a stochastic frontier analysis (range 0-1, lower number=higher efficiency) benchmarking enrollment, completion, years of schooling, literacy, pupil–teacher ratios, harmonized learning outcomes. ### Health: adequacy, composition, and delivery challenges - System characteristics and challenges: - Namibia operates a dual health system: public system serves over 80 percent of the population; private sector employs a disproportionately large share of health care professionals. - Low population density raises delivery costs and exacerbates disparities in access. - Namibia continues to face high burdens of communicable and non-communicable diseases, including HIV and tuberculosis. - Public health spending facts: - Public health expenditure accounts for about 15 percent of total government spending, or 5.5 percent of GDP in 2023. - Composition is heavily concentrated in current spending: - Wage costs—and overtime payments in particular—are a major source of budget overruns, especially post‑COVID-19. - Limited capital investment and under provision of quality‑enhancing inputs, which have represented less than 1 percent of total spending in recent years. - Adequacy relative to needs and peers: - At comparable levels of GDP per capita, Namibia ranks among the highest in government health spending, both in per capita terms and as a share of total government expenditure. - IMF estimates additional financing required to close health-related Sustainable Development Goal (SDG) gaps: approximately 1.4 percent in 2030 as a percent of 2030 GDP. - Health input indicators (availability of health workers and hospital beds) are higher than SSA averages but below EME averages and unevenly distributed, with a large share of health professionals concentrated in the private sector. ### Policy implications and priorities identified in the text - Anchor social spending assessments in a credible medium-term fiscal framework to maintain debt sustainability and macroeconomic stability. - Given constrained fiscal space, prioritize spending efficiency to achieve intended social outcomes within tight fiscal constraints. - Education sector priorities suggested by the analysis: - Examine and rebalance allocative choices across education levels (tertiary versus primary/secondary) and between recurrent and capital spending. - Improve relevance and alignment of education programs with labor market needs to strengthen school‑to‑work transitions. - Targeted examination of factors constraining secondary enrollment. - Health sector priorities suggested by the analysis: - Address recurrent-cost pressures (wage and overtime management) and rebalance toward capital investment and quality‑enhancing inputs. - Tackle uneven distribution of health professionals between public and private sectors to improve equitable access. - Overall recommendation: - Strengthen program design, targeting, implementation capacity, and governance to improve spending efficiency as a means to preserve fiscal space while supporting inclusive and sustainable growth. *Source: sipea2026059* ### 21. Against this backdrop, health ### 21. Against this backdrop, health ### Health outcomes and trends - Healthy life expectancy stood at 52.8 years in 2021, below both the SSA and middle-income country averages of 54.9 and 62.4 years, respectively; and had declined from earlier highs, partly reflecting COVID-19 disruptions and underlying structural challenges that predate the pandemic (WHO, 2024). - Infant mortality and life expectancy indicators are weaker than those of emerging market peers. - Health spending is comparatively high relative to regional and income group peers, yet outcomes remain below those achieved by some peer countries at comparable spending levels. ### Financing architecture, fragmentation, and reforms (Box 1) - About a quarter of government health spending is used to subsidize the Public Service Medical Aid Scheme (PSEMAS), an insurance scheme for civil servants and their dependents, which covers only 12 percent of the population and allows access to both private and public health care services (UNICEF, 2022). - PSEMAS financing composition: - Largely financed through government contributions, accounting for over 75 percent of total funding, with the remainder funded through employee contributions at a flat-rate as a percentage of earnings (UNICEF, 2022). - Creates a two-tier system in which civil servants can access private care while most of the population relies on tax-funded public services. - Spending composition and concentration: - Health spending has become increasingly concentrated in hospitals and clinical and curative care, accounting for over 70 percent of the MoHSS budget. - Key reform milestones and measures: - October 2025: Adoption of the UHC Policy and the Ministry of Health and Social Services Strategic Plan for 2025/26–2029/30, targeting expanded access, improved quality, and strengthened governance. - April 2026: Launch of the Vision April 2026 initiative, which requires civil servants to seek inpatient care in public facilities, with PSEMAS reimbursements reinvested into the public system. - Complementary measures include infrastructure upgrades, workforce expansion, improved medical equipment procurement, and electronic billing and IT systems. - Reform objectives: consolidate risk pooling, reduce financing fragmentation, and strengthen the link between health spending and service delivery. - Implementation risks: facility readiness, referral systems, and administrative capacity. ### Health spending efficiency and gaps - Namibia’s estimated efficiency levels have increased slightly over the past two decades and are broadly comparable to those of other SACU members, but remain lower than emerging market peers; improvements over time have been gradual. - The estimated efficiency gap indicates that, at existing spending levels, health outcomes are below those achieved by some peer countries. - The SFA (stochastic frontier analysis) framework: - Primary input: public health expenditure per capita in constant 2021 PPP dollars, smoothed using a five‑year moving average. - Outputs: measures of healthcare capacity (such as physicians per capita) and health outcomes (including life expectancy and infant mortality), incorporated jointly through a multi‑output distance function. - Further methodological details referenced in IMF Fiscal Monitor 2025 Chapter 1 Online Annex. ### Drivers of outcome gaps and system constraints - Systemic allocation choices that may reduce effectiveness: - Financing fragmentation (PSEMAS concentration). - Concentration of spending on curative care and hospitals rather than primary and preventive care. - Structural cost factors: - Low population density and geographic dispersion raise service delivery costs and constrain equitable access. - Documented weaknesses: budget execution, inter-regional resource allocation, procurement, pharmaceutical management, and hospital productivity (World Bank, 2019). ### Social protection and interactions with health - Social assistance spending is around 3 percent of GDP, exceeding averages of comparison groups and reflecting a strong policy commitment to redistribution. - Namibia’s social assistance system covers many vulnerabilities, using programs that are generally not income- or means-tested (Box 2 lists Old Age Grant, Disability Grant, Child Grants, Veterans’ Grant, Conditional Basic Income Grant, National Drought Relief Program). - Evidence from SPLAT (using 2015/16 household survey data) suggests Namibia’s social assistance system reduces the simulated poverty gap and headcount more than the median EME and mean SSA, conditional on total social assistance spending levels. - Coverage and targeting challenges: - Coverage of social assistance programs remains moderate with a sizable share of the poor not reached. - Benefit incidence accruing to the poorest 20 percent is below that observed in several EMEs and OECD countries. - The Old Age Grant—large share of social assistance spending—shows lower benefit and beneficiary shares for the poorest and higher shares for the richest compared with the median EME and mean SSA. ### Policy recommendations and priorities - Improve allocative efficiency within existing fiscal constraints rather than relying primarily on spending increases. - Health sector: - Shift spending toward primary and preventive care and frontline service delivery (infrastructure, equipment, workforce deployment). - Consolidate risk pooling by redirecting PSEMAS beneficiaries toward public facilities (phased approach under Vision April 2026). - Address implementation risks: facility readiness, referral systems, and administrative capacity. - Education sector (summary from broader chapter conclusions): - Rebalance composition of spending across education levels and between wage-heavy recurrent outlays and quality-enhancing inputs. - Address repetition and dropout rates and strengthen school-level performance monitoring. - Social assistance: - Strengthen targeting mechanisms and expand effective coverage of the most vulnerable. - Redirect savings from improved targeting toward better coverage without crowding out other priorities. - Fiscal framework: - Improve spending efficiency to help anchor public spending within a credible medium-term fiscal framework, support debt sustainability, preserve room to respond to shocks, and secure priority investments. *Source: sipea2026059* --- _Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2026/english/sipea2026059.pdf_