IMF Staff Completes 2026 Article IV Mission to Namibia

IMF News, March 27, 2026

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Namibia’s real GDP growth slowed to 1.7 percent in 2025.
Growth is expected to remain subdued in 2026, partly reflecting the impact of the ongoing conflicts in the Middle East through higher fuel costs and weaker global demand.
Inflation moderated in 2025 and declined to 2.4 percent year on year in February 2026; rising fuel prices are projected to raise inflation for the year.
Upside and downside scenario factors:
- Downside: further weakening of global demand, heightened commodity price volatility (particularly fuels and fertilizers), tighter global financing conditions, and a continued slump in demand for natural diamonds.
- Upside: any final investment decision by oil exploration companies or faster implementation of reforms to enhance public investment.

The current account deficit narrowed from 15.2 percent of GDP in 2024 to 13.2 percent of GDP in 2025, supported by stronger uranium and gold exports that more than offset lower SACU revenues and the downturn in the diamond sector.
The current account deficit is expected to remain sizable due to FDI‑related imports for oil exploration and mineral mining.
Gross foreign reserves declined following the redemption of Namibia’s US$750 million Eurobond in October 2025, with reserve coverage standing at 3.5 months of imports at end‑2025.

The fiscal deficit is estimated to have widened markedly in FY25/26, driven primarily by a sharp decline in SACU revenues, which more than offsets ongoing efforts to contain the wage bill, strengthen tax collection, and reduce subsidies and transfers.
The FY26/27 budget envisages further fiscal consolidation, primarily through:
- Reforming the Public Service Employees Medical Aid Scheme (PSEMAS).
- Reducing transfers to public enterprises.
- Controlling spending on goods and services.
Policy recommendations to put debt on a downward path:
- Deliver concrete measures to ensure envisaged primary surpluses under the medium-term expenditure framework are achievable.
- Strong expenditure restraint, particularly to contain recurrent spending.
- Improved revenue administration.
- Contain the public wage bill through civil service reforms; ongoing review to align staff size, skills, and deployment is an essential step.
- Full implementation of planned PSEMAS reform to generate significant savings.
- Implement the public sector management framework and prepare and publish the PE risk report to ensure planned reduction in transfers to public enterprises is sustainable.
- Support these efforts with broader public financial management reforms, including procurement reform.

The Bank of Namibia (BoN) maintained its policy rate at 6.5 percent in February 2026, with the policy rate gap with the South African Reserve Bank (SARB) maintained at 25 basis points.
Credit growth to the economy picked up slightly to 4.4 percent in 2025, from 4.0 percent in 2024, mainly driven by stronger credit uptake by businesses.
The banking system remains liquid and well capitalized, with non-performing loans moderating to 4.3 percent.
Recommendations for the BoN:
- Closely monitor developments given heightened global uncertainty and upside pressures on commodity prices.
- Carefully calibrate policy rate alignment with the SARB and stand ready to take measures as needed to safeguard the currency peg and ensure adequate reserve coverage.
- Manage policy with agility as the SARB transitions to a new 3-percent inflation target in a volatile global environment.

Authorities will continue to enhance financial sector oversight to monitor macro-financial risks and safeguard financial stability.
Regulations for the implementation of the Financial Institutions and Markets Act are near completion, supporting full implementation of the law by mid-2026.
Significant progress has been made in strengthening Anti-Money Laundering / Countering the Financing of Terrorism frameworks to secure Namibia’s timely exit from the Financial Action Task Force grey list this year.

Structural reforms are essential to support diversification and job creation.
Priority actions recommended:
- Improve the business environment by expediting permitting processes and implementing a practical local content policy to unlock private-sector-led growth.
- Timely implementation of authorities’ plans to advance digitalization and e‑government reforms to improve government efficiency.
- Align education and training programs with labor‑market needs to address skills mismatches and ensure that growth translates into employment gains.

International Monetary Fund. Press Release No. 26/092. March 27, 2026.