International Monetary Fund is positive about Namibia's economy

The weak global economy remains Namibia’s most evident obstacle in the upcoming financial year, a trend the government will have to prepare for by reining in wanton spending and putting in place other buffers. This was the message last week from an International Monetary Fund (IMF) delegation who visited Namibia between October 24 and November 7, reviewing recent economic developments, prospects and policies in the country. Summarising the group’s findings on Thursday, IMF mission chief for Namibia Lamin Leigh spoke highly of Namibia’s fiscal policy and banking sectors in general, but criticised ongoing bailouts of state-owned enterprises (SOE). “The authorities’ increasing emphasis on efficiency and innovation-driven growth, underpinned by greater private-sector development, to boost economy-wide productivity is a step in the right direction,” Lamin said. “This approach would require increasing the quality of public spending including through ongoing reforms of public financial management, improving the efficiency and effectiveness of the tax system, reducing the cost of doing business and diversifying the economy,” he said. Providing an overview for this year, the IMF delegation head said it forecasts output growth to moderate to about 4% in 2013, with mineral exports likely to be subdued in the second half of the year due to slower growth in Namibia’s major trading partner economies. “With an uncertain external environment, the mission urges the authorities to begin to rebuild the policy buffers. This should be pursued through a growth-friendly fiscal consolidation strategy, which would focus on reining in current spending such as current transfers and subsidies to state-owned enterprises, while preserving growth-promoting capital and infrastructure spending, which some SOEs contribute to,” Leigh said.