Mally Likukela
Minister of Finance, Hon. Erica Shafuda announced last week that she will present the national Budget 2026-27 on Thursday, February 26.
Understanding the budget speech
First and foremost, citizens must understand that the budget statement is not “The Budget” as is commonly known, but it is just one of the documents in a set of several other documents that the Minister presents (or tables) to Parliament. The Budget Speech together with other documents is aimed to explain the Government’s plan for revenue, spending, borrowing and taxation down to the last dollar.
Structure of the budget speech
To be able to decipher the budget statement, citizens must read it in conjunction with the most recent previous statement. The structure matters as it controls the flow of the message and over the past, the budget speech has always assumed a structured policy statement format. Based on the Mid-Year Review Policy Speech for 2025/26 Financial Year, the upcoming statement is most likely to contain the following parts: Introduction and Policy Context, Global Economic context, Fiscal Performance and Outlook, Revenue Proposals, Budget Priorities and Expenditure Allocations, Financing and Debt Management and the Conclusion.
What to look out for in the budget statement
In the Budget statement for the fiscal year to be tabled on the 26th of February 2026, it is important for citizens to look out for what the government will be signalling about critical issues that affects the economy in general and households in particular.
General observation
Global and domestic developments: Start by looking at how Government view global and domestic developments (events) and their impact on growth, inflation, interest, and exchange rate risks. These variables are crucial because they serve as “barometer” of the status of the economy and sets the stage for how tax money will be collected and spent. At the time of the mid-term budget review, the World Bank had forecasted that advanced economies were to decrease from 3.3% in 2024 to 3.2% in 2025 and further down to 3.1% in 2026.
Global and domestic developments, Revenue (Income): Citizen should understand where is the money coming from and how much has been collected? At the time of the last statement (mid-term budget review), government had indicated that the revenue outrun had reached N$36.6 billion. Another pertinent question to ask is where this money is coming from. If it is mostly from taxes on individuals (income tax/VAT), the burden is on the citizen. If it is high in borrowing, the burden is on future generations.
Expenditure plans: When it comes to the expenditure plans, citizens should check the Budget statement to see whether Government will continue with the fiscal expansion or it will tighten spending; if it tightens the budget, which sectors, or priority areas will be affected. At the time of the Mid-term budget review, the total expenditure remained at N$89.4 billion.
Capital/development spending: Citizens should also assess also whether Government is going to prioritise long-term capital/development spending and which sectors it believes will shape Namibia’s next phase of growth (energy, agriculture, education, etc,). Here it is particularly important to also check for government’s deviations (if any) from its long-term development plans as contained in the Vision 2030, NDP(s), Harambee and even the political manifesto of the ruling party. At the time of the Mid-term budget review, government have reduced the capital budget from N$9.6 billion to N$8.8 billion.
Fiscal stance: It is also critical to look at the statement and assess the fiscal stance or what is also commonly known as budget balance. From the statement one should be able to tell whether the Government plans to run a deficit, surplus, or balanced budget. According to the Mid-term budget review, budget deficit widened to 6.0% of GDP, up from the initial 4.6% forecasted. Given Namibia’s notable Debt profile, the budget balance is a critical number to shed light on the country’s debt sustainability plan. This number indicates how much the government must borrow to cover the financial shortfall.
Public Debt Stock: Citizens should also look for the Public Debt Stock figures to check if the debt-to-GDP ratio is projected to rise, and if this happens to be the case, it could indicate long-term sustainability risks. These figures are usually less visible tin the statement to most citizens yet are especially important – borrowing levels shape inflation expectations and interest rates that eventually influences the financial environment household’s lives. Namibia’s public debt stock was projected to rise to N$177.1 billion (67.5% of GDP) by the close of the 2025/26 fiscal year, according to Bank of Namibia forecasts. The Mid-Year Budget Review indicates that rising interest payments, estimated at N$14.4 billion (15% of revenue), are driving the need for tighter fiscal management.
Specific observations
Understanding the government’s budget statement is beneficial for citizens because it provides essential insights into how these national or regional economic policies pronouncements will impact their bread-and-butter issues.
Red Flags in the statement
There are several red flags that citizens can easily flag out in the budget statement. These are warning signs that a government’s fiscal policy is unsustainable, inefficient, or poses risks to economic stability that citizens should look out for in the speech.
Low Budget Implementation Rate: Citizens to look out for low budget implementation. If a number of ministries that have been allocated funds fails to spend them (under-spending), it signals inefficiency, even if the planned spending looked good on paper. In the Mid-term budget review for the 2025/2026, low-budget implementation, specifically regarding capital projects, was already identified as a critical issue. As of September 2025, the total expenditure and commitment excluding statutory had reached only N$41 billion, which accounts for 39% of the budgeted spending for the fiscal year.
Rising Debt-to-GDP Ratio: Citizens must look out for rising debt-to-GDP ratio. If this ratio is rising, it means that debt grows faster than the economy – this signals that the current spending level is unsustainable. The Mid-term budget already hinted on the worsening Debt-to-GDP situation that had climbed to a cumulative amount of N$176.3 billion by the end of September 2025.
High Debt Service Costs: Linked to the previous red flag is the high debt service cost. If a sizeable percentage of revenue goes toward paying interest on loans, less money is available for actual service delivery. The impact of which was already revealed in the previously mentioned statement, where interest payment totalled an amount of N$6.8 billion, a substantial 6.4 percentage point increase compared to September 2024.
Low Development Expenditure: Citizen should look out for misalignment in the budget. If the budget is entirely operational (salaries) with little for new infrastructure, the government is not investing in future growth. According to the Mid-term budget statement of 2025/26 government already reduced development expenditure by 9.38% to N$8.8 billion, shifting funds toward operational costs amid slowing growth.
Negative Primary Balance: Citizen should also check for the negative primary balance. If income minus non-interest spending is negative, the government is borrowing money just to keep the lights on, not for investment. While in case of Namibia, the budget outlook indicates a narrowing primary surplus dropping to N$915 million (0.3% of GDP) from an earlier N$1.3 billion estimate, but the widening budget deficit remains a concern.
Unrealistic Revenue Projections: Citizens should look out for unrealistic revenue projections in the statement. If the government predicts high revenue growth in a failing economy, the budget may be inaccurate, leading to emergency cuts later in the year. The revenue pressure was already highlighted in the Mid-year budget statement of 2025/26 budget review where government reported a slower revenue collection rate, with N$36.6 billion collected by September 2025, representing 40% of total estimates. Revenue collection fell 10 % points below the same period in 2024/25, highlighting a weakened revenue outlook amid a projected 3.3% economic growth.
High allocation to subsidies for State-Owned Enterprises (SOEs): Citizen should look out for the subsidy trends towards SOEs. If the statement shows a high allocation to SOEs, this often indicates that public owned enterprises are underperforming and taxpayers are footing the bill for their losses.
*Mally Likukela is an economist at Twilight Capital Consulting cc.
