IMF Staff Completes 2017 Article IV Mission to Namibia

IMF News, December 12, 2017

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The IMF staff notes: "After years of exceptional growth, the economy has entered an adjustment phase."
Growth is expected to "turn slightly negative in 2017," compared to a growth of "1.1 percent in 2016."
Growth is projected to "resume in 2018 and accelerate thereafter to about 4 percent as production from new mines ramps up and manufacturing and retail activities recover."
Downside risks highlighted: "volatile Southern African Customs Union (SACU) revenue, subdued commodity prices, and fiscal slippages that could undermine policy credibility."

With "SACU revenue declining, significant fiscal adjustment is needed to ensure debt sustainability and macroeconomic stability."
Policies should address sources of recent deterioration, including "public wage costs."
Recommended measures should "combine expenditure and revenue measures that can support long-term growth, while safeguarding critical social and development spending."
Key fiscal governance actions urged:
- "Strengthening revenue administration"
- "Improving budget formulation and expenditure controls"
- "Carefully managing extra-budgetary entities and public enterprises"
- "Avoiding risk taking from off-budget operations" to protect the credibility of adjustment
The mission "welcomes the authorities’ commitment to undertake additional measures to reduce the fiscal deficit, as stated in the recent Mid-Year Policy Statement."

The mission: "The financial sector remains sound."
Authorities are taking steps to manage risks and advance reforms, including:
- "Strengthening bank’s liquidity monitoring and asset classification"
- "Introducing a bank resolution regime"
- "Expanding the macroprudential toolkit"
- "Upgrading the non-bank regulatory and supervisory framework"
Expected benefits: these actions "should help address macro-financial and structural vulnerabilities, including some banking and non-banking sector weaknesses, rising real estate prices, relatively high household indebtedness, and complex linkages across financial institutions."

Key challenges: "to manage the ongoing adjustment process and preserve macroeconomic stability, while reducing unemployment and income inequality."
Government actions to date: "The government has taken actions to support growth, tackle high unemployment, particularly among the youth, and reduce income inequality."
Reforms with potential to boost employment and inclusiveness:
- "Addressing the shortage of skilled workers"
- "Better aligning wage dynamics to productivity trends"
- "Simplifying business regulations"
The mission notes these reforms "have the potential to significantly boost employment and deliver more inclusive growth."

IMF staff team led by Mr. Geremia Palomba, "IMF Mission Chief for Namibia," visited Windhoek during "November 30-December 12, 2017" to conduct the 2017 Article IV Consultation with Namibia.
At the conclusion of the visit Mr. Palomba stated the findings quoted throughout this release.
The mission met with "Prime Minister Saara Kuugongelwa-Amadhila, Minister of Finance Calle Schlettwein, Bank of Namibia Governor Ipumbu Shiimi, other senior officials, and financial market, business and union representatives."
The findings of the mission "will be reflected in the 2017 Article IV staff report." This report, together with the joint IMF-World Bank Financial Sector Assessment Program (FSAP) report, "is expected to be discussed by the IMF Executive Board in early 2018."
Press release identification: "Press Release No. 17/485."

IMF Communications Department — Press Release dated December 12, 2017