Chamwe Kaira
Namibia’s fiscal outlook remains manageable in the short term but faces growing pressure from structural weaknesses, according to analysis by FNB Namibia economist Cheryl Emvula.
She said the 2026/27 National Budget outlines a fiscal path that still functions for now but shows signs of strain.
Revenue performance has weakened. Government collections for the 2025/26 financial year were revised down to N$87.4 billion. This figure is below the original projection of N$89.4 billion and the N$89.1 billion collected in the previous year.
Revenue is expected to increase to N$89.8 billion in the 2026/27 financial year. The projected increase relies largely on higher receipts from the Southern African Customs Union rather than stronger domestic revenue sources.
Several revenue streams remain under pressure. These include diamond-related income, value-added tax, personal income tax and gold receipts.
Gold revenue has declined as mining operations shift toward underground production, which carries higher costs.
Government spending pressures are also rising. The civil service wage bill and the cost of free education continue to limit fiscal flexibility.
Interest payments on public debt are increasing. The Treasury projects that interest costs will reach N$16.2 billion in the 2026/27 financial year. This will absorb about 18.1% of total government revenue.
Emvula said this level of interest payments is above the government’s long-term targets and places strain on public finances.
Concerns about debt sustainability remain. The debt-to-GDP ratio shows slight improvement in 2025/26, though the change is partly linked to higher nominal GDP assumptions.
Recent economic data suggests nominal GDP may be lower than the fiscal baseline. This means the actual debt ratio could be higher and may exceed 70% if economic growth remains weak.
Government debt is projected to rise to N$193.4 billion in 2026/27.
The expected stabilisation of debt at around 67% of GDP depends on growth assumptions that may not match current economic trends.
Government borrowing needs are also increasing. The gross borrowing requirement is projected to rise from N$12.5 billion in 2025/26 to N$19.1 billion in 2026/27.
About 90% of this funding is expected to come from domestic borrowing, which may tighten liquidity in the financial system.
Domestic bond issuance has already grown, reaching N$20.6 billion in 2025. If issuance continues at a similar pace in 2026, government borrowing could compete with private sector demand for credit.
Economic growth trends also add to the risks. Treasury forecasts real GDP growth of 2.9% for 2025. Economic performance for the first three quarters averaged about 1.99%.
The government projects economic growth of 3.1% for 2026.
Emvula said the difference between fiscal projections and economic performance increases the risk that revenue collections could fall short.
She said rising interest payments, slower revenue growth, reliance on domestic borrowing and optimistic growth assumptions point to a narrower fiscal buffer.
