IMF Executive Board Concludes 2022 Article IV Consultation with Namibia
IMF News, December 8, 2022
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- Published: December 8, 2022
Recent economic performance and context
- The Namibian economy is gradually recovering from the impact of the COVID-19 pandemic.
- After a sharp contraction in 2020, real GDP growth reached 2.7 percent in 2021 and the recovery strengthened in the first half of 2022.
- Mining activity has rebounded while manufacturing and tertiary sector activities are gradually recovering.
- Inflationary pressures have risen as higher international oil and food prices, due to the repercussions of Russia’s war in Ukraine, were passed through to the domestic economy.
Short-term outlook and projections
- Real GDP growth is expected at 3 percent in 2022 and 3.2 percent in 2023, supported by robust diamond, gold, and uranium production and a gradual recovery in tourism and manufacturing.
- Average inflation would reach about 6 ½ percent in 2022 and start to moderate in 2023.
- The current account deficit is expected to remain large in 2022, reflecting higher international food and fuel prices, a sharp decline in SACU receipts and large FDI-financed imports in oil and gas.
- The fiscal deficit would narrow in FY22/23, supported by fiscal consolidation measures to mobilize additional revenues and increase spending efficiency.
- Deteriorating global conditions could adversely impact Namibia’s short-term outlook and worsen external and fiscal imbalances.
Executive Board assessment — key messages
- Directors noted the expected gradual recovery but highlighted risks from deteriorating global economic conditions.
- Directors called for continued orientation of macroeconomic policies toward preserving macroeconomic stability, while fostering inclusive growth to reduce high unemployment and inequality.
- Directors welcomed progress on medium-term fiscal consolidation and measures to protect the most vulnerable from higher food and fuel prices and food insecurity.
- Directors stressed that planned fiscal adjustment measures are pivotal to preserve debt sustainability and strengthen the external position.
- Recommended priorities included advancing measures to:
- contain the wage bill;
- enhance tax collection and enforcement;
- reform state-owned enterprises;
- strengthen public financial management.
- Directors called for strong governance and management of the new sovereign wealth fund and generally supported delaying its operationalization until public debt declines and reserves strengthen.
- On monetary and financial sector policy, Directors:
- highlighted the need to maintain the policy rate broadly aligned with the South African Reserve Bank's rate and to preserve adequate reserves to anchor inflation and preserve the currency peg;
- encouraged further efforts to strengthen financial sector resilience and mitigate macro-financial risks;
- welcomed progress on implementing the 2018 FSSA recommendations, while emphasizing the need to expand macroprudential tools and operationalize the central bank’s emergency lending assistance.
- Directors called for swift implementation of the action plan to strengthen the AML/CFT framework.
- Directors emphasized advancing structural reforms to foster diversification, increase productivity, improve the business environment, increase access to finance, strengthen governance, and address food insecurity, including measures to strengthen climate resilience in the agricultural sector.
Selected economic indicators (highlights from Table 1)
- GDP at constant prices (percentage change): 2018: 1.1; 2019: -0.8; 2020: -8.0; 2021: 2.7; 2022: 3.0; 2023: 3.2; 2024: 2.6.
- GDP at market prices (N$ billions): 2018: 181; 2019: 174; 2020: 182; 2021: 201; 2022: 219; 2023: 236; 2024: 253; 2025: 271; 2026: 290; 2027: (not listed).
- GDP per capita (US$, constant 2000 exchange rate): 2018: 10,817; 2019: 10,626; 2020: 10,030; 2021: 10,287; 2022: 11,168; 2023: 11,959; 2024: 12,639; 2025: 13,308; 2026: 13,981; 2027: 14,697.
- Consumer prices (average): 2018: 3.7; 2019: 2.2; 2020: 3.6; 2021: 6.4; 2022: 4.9.
- Exports (US$ percentage change): 2018: 12.1; 2019: -7.6; 2020: -19.0; 2021: 14.1; 2022: 16.1; 2023: 11.9; 2024: 6.3; 2025: 5.1.
- Imports (US$ percentage change): 2018: 3.4; 2019: -9.8; 2020: -21.0; 2021: 35.0; 2022: 9.3; 2023: 4.6; 2024: 3.1; 2025: 4.1.
- Terms of trade (deterioration = - ): 2018: -0.5; 2019: 2.0; 2020: 6.9; 2021: -9.6; 2022: 13.1; 2023: -0.1; 2024: -1.5; 2025: 11.8.
- Exchange rate (N$/US$, period average): 2018: 13.2; 2019: 14.5; 2020: 16.5; 2021: 14.8.
- Exchange rate (N$/US$, end of period): 2018: 14.4; 2019: 14.0; 2020: 14.7; 2021: 15.9.
- Domestic credit to the private sector (percent change): 2018: 7.2; 2019: 7.1; 2020: 2.4; 2021: 1.0; 2022: 5.2; 2023: 5.6; 2024: 6.7.
- BoN repo rate (percent): 2018: 6.75; 2019: 6.50; 2020: 3.75.
- Investment (percent of GDP): 2018: 14.9; 2019: 15.3; 2020: 13.6; 2021: 15.2; 2022: 15.1.
- Central government revenue and grants (percent of GDP): 2018: 30.8; 2019: 32.6; 2020: 33.0; 2021: 29.6; 2022: 30.1; 2023: 31.0; 2024: 31.9; 2025: 31.5; 2026: 31.6; 2027: 31.7.
- Of which: SACU receipts (percent of GDP): 2018: 9.6; 2019: 12.6; 2020: 7.9; 2021: 8.6.
- Central government expenditure and net lending (percent of GDP): 2018: 36.4; 2019: 38.2; 2020: 41.8; 2021: 38.3; 2022: 37.2; 2023: 36.2; 2024: 35.6; 2025: 35.4.
- Primary balance (deficit = - , percent of GDP): 2018: -2.3; 2019: -1.8; 2020: -4.6; 2021: -4.4; 2022: -2.5; 2023: -0.2; 2024: 1.2; 2025: 1.3; 2026: 1.8.
- Overall balance (percent of GDP): 2018: -5.6; 2019: -8.8; 2020: -8.7; 2021: -7.1; 2022: -4.2; 2023: -4.0; 2024: -3.8.
- Public debt/GDP (percent): 2018: 50.4; 2019: 59.9; 2020: 65.9; 2021: 70.1; 2022: 69.7; 2023: 69.5; 2024: 69.1; 2025: 68.7; 2026: 68.1; 2027: 67.5.
- Of which: domestic (percent of GDP): 2018: 39.5; 2019: 44.7; 2020: 51.9; 2021: 52.3; 2022: 52.4; 2023: 53.1; 2024: 54.5; 2025: 55.3; 2026: 55.6.
- Gross public and publicly guaranteed debt/GDP (percent): 2018: 56.5; 2019: 66.7; 2020: 72.3; 2021: 75.5; 2022: 75.7; 2023: 75.1; 2024: 74.7; 2025: 74.1; 2026: 73.5.
- Current account balance (including official grants, percent of GDP): 2018: -3.3; 2019: -1.7; 2020: 2.9; 2021: -9.5; 2022: -5.8; 2023: -4.9; 2024: -3.9; 2025: -3.6.
- External public debt (including IMF, percent of GDP): 2018: 17.8; 2019: 20.4; 2020: 21.2; 2021: 18.2; 2022: 17.4; 2023: 17.2; 2024: 16.0; 2025: 14.2; 2026: 12.9.
- Gross official reserves (US$ millions): 2018: 2,155; 2019: 2,071; 2020: 2,158; 2021: 2,766; 2022: 2,603; 2023: 2,814; 2024: 2,988; 2025: 3,200; 2026: 3,406; 2027: 3,586.
- Gross official reserves (percent of GDP): 2018: 17.1; 2019: 24.2; 2020: 21.1; 2021: 21.3; 2022: 21.5; 2023: 21.9; 2024: 22.3; 2025: 22.1.
- External debt/GDP 2/ (percent): 2018: 61.7; 2019: 66.4; 2020: 77.3; 2021: 66.5; 2022: 64.6; 2023: 61.5; 2024: 58.4; 2025: 56.2; 2026: 53.9; 2027: 50.6.
- Memorandum item — Population (in million): 2.5; 2.8 (as provided).
Policy recommendations and priorities
- Preserve macroeconomic stability while fostering inclusive growth to reduce unemployment and inequality.
- Advance and implement fiscal consolidation measures to:
- mobilize additional revenues;
- increase spending efficiency;
- contain the wage bill;
- enhance tax collection and enforcement.
- Reform state-owned enterprises and strengthen public financial management.
- Delay operationalization of the sovereign wealth fund until public debt declines and reserves strengthen; ensure strong governance and management of the fund.
- Maintain policy rate alignment with the South African Reserve Bank and preserve adequate reserves to anchor inflation and preserve the currency peg.
- Strengthen financial sector resilience by expanding macroprudential tools and operationalizing central bank emergency lending assistance.
- Swiftly implement the action plan to strengthen the AML/CFT framework.
- Advance structural reforms to foster diversification, productivity, private sector-led growth, job creation, improved business environment, increased access to finance, stronger governance, and measures to strengthen climate resilience in agriculture to address food insecurity.
Press Release No. 22/419 — IMF Executive Board Concludes 2022 Article IV Consultation with Namibia (December 8, 2022).