Chamwe Kaira
An International Monetary Fund (IMF) team has called for stronger fiscal discipline and faster reforms to support Namibia’s economic recovery.
The delegation, led by Xiangming Li, visited Windhoek from 16 to 20 March 2026 for its Article IV consultation.
The IMF said further fiscal adjustment is needed to reduce public debt. It called for tighter control of spending, especially on recurrent costs, and better revenue collection.
It also urged the government to contain the public wage bill through civil service reforms and to implement changes to the Public Service Employees Medical Aid Scheme to reduce costs.
The IMF said transfers to public enterprises should be reduced through stronger oversight and better management.
It also called for improvements in procurement and public financial management.
On monetary policy, the IMF noted that the Bank of Namibia kept its policy rate at 6.5% as of February, maintaining a 25-basis-point gap with the South African Reserve Bank.
Credit growth rose to 4.4% in 2025, supported by lending to businesses. The banking sector remains liquid and capitalised, with non-performing loans declining to 4.3%.
The IMF said the central bank should remain alert to global risks, including rising commodity prices, and be ready to act to protect the currency peg and reserves.
It also highlighted progress in financial sector regulation, noting that rules under the Financial Institutions and Markets Act are close to completion.
The IMF welcomed improvements in anti-money laundering systems and said Namibia could exit the Financial Action Task Force (FATF) grey list within the year.
Economic growth remains slow. Namibia’s GDP grew by 1.7% in 2025, affected by weak diamond demand and a slow recovery in livestock after the 2024 drought.
Growth is expected to remain modest in 2026, with global factors, including conflict in the Middle East, affecting fuel prices and demand.
Inflation eased to 2.4% year-on-year in February 2026 but is expected to rise as fuel prices increase.
The current account deficit narrowed to 13.2% of GDP in 2025, supported by higher uranium and gold exports. It is expected to stay high due to imports linked to oil and mining investment.
Foreign reserves declined after the repayment of a US$750 million Eurobond in October 2025, leaving import cover at 3.5 months.
The IMF warned of risks from weaker global demand, volatile commodity prices and tighter financial conditions. A prolonged drop in diamond demand could delay recovery.
It said growth could improve if oil investment decisions advance and public investment reforms are implemented faster.
The fiscal deficit widened in the 2025/26 financial year due to lower Southern African Customs Union revenue.
The 2026/27 budget aims to address this through spending cuts, reforms to PSEMAS and reduced transfers to public enterprises.
