Chamwe Kaira
Namibia’s fiscal position for the 2025/26 financial year shows growing pressure on revenue and rising debt, with limited room for policy adjustment in the short term.
The government has revised its revenue forecast downward from about N$92.6 billion to N$89.4 billion after weaker-than-expected collections from major tax and non-tax sources.
By mid-year, revenue collections stood at about N$36.6 billion, or 41% of the revised target. This falls below the usual mid-year benchmark of around 50%, pointing to deeper revenue weakness.
Transfers from the Southern African Customs Union (SACU) remain volatile, making fiscal planning difficult.
Mining revenues have also slowed, especially from diamonds, due to lower global demand and reduced production.
Projections suggest total revenue could fall short by between N$2.1 billion and N$4.3 billion, depending on fourth-quarter performance.
Namibia’s tax-to-GDP ratio remains high at about 33%. This is above South Africa’s level of about 26% and Botswana’s 22% and well above the global average of 13% to 14%.
The fiscal deficit is expected to widen to about 6% of GDP, compared to an earlier projection of 4.6%.
In nominal terms, the deficit could range between N$15.8 billion and N$20.1 billion, depending on final revenue outcomes.
The primary balance has weakened to about N$1.4 billion, down from a previous expectation of N$9.5 billion, showing reduced fiscal buffers and greater reliance on borrowing.
Public debt is projected to rise to about N$177 billion in 2025/26, equal to around 60% of GDP. The debt profile has shifted after the redemption of eurobonds and repayments to the International Monetary Fund.
Foreign debt now stands at about N$25.6 billion, or 14.4% of total debt. This reduces exchange-rate exposure but increases reliance on the domestic capital market.
Domestic borrowing needs have increased to about N$26.3 billion, up from N$21.2 billion. Investor demand at government bond auctions has slowed compared to 2023 levels.
Subscription ratios averaged about 1.8 times during 2024–2025, down from more than three times previously.
Looking ahead to the 2026/27 fiscal year, Simonis Storm said fiscal sustainability will depend on stabilising revenue, stronger economic growth and tighter spending control.
Without recovery in domestic consumption, stronger SACU inflows or a rebound in diamond output, revenue growth is likely to remain modest.
If nominal GDP growth averages 4% to 5% and deficits stay between 5% and 6% of GDP, the debt-to-GDP ratio could stabilise slightly above 60%. There is a risk it could drift toward 65% to 70% over the medium term.
