Chamwe Kaira
Standard Bank Namibia says the success of the 2026/27 national budget will depend on disciplined execution, tight spending control and timely structural reforms.
In its technical review of the budget tabled on 26 February by finance minister Ericah Shafudah, the bank said the plan sets out a fiscally responsible but ambitious roadmap. It said results will depend less on projections and more on efficient implementation, stronger institutions and reforms that broaden the revenue base and support investment.
The bank said the budget seeks to balance fiscal prudence with growth at a time of weak domestic and global conditions.
Namibia’s GDP growth for 2025 was revised down to 2.9% from 3.3%. Growth of 3.1% is projected for 2026 and an average of 3.3% over the Medium-Term Expenditure Framework. This remains below the 3.7% recorded in 2024, pointing to a moderate recovery path.
Inflation is expected to average 3.5% in 2026, unchanged from 2025. The weaker growth outlook raises revenue risks, especially as Southern African Customs Union receipts and diamond exports remain under pressure.
Revenue and grants for 2025/26 were revised down to N$87.4 billion from N$89.4 billion in the October 2025 mid-year review.
Standard Bank said revenue risks remain balanced. It noted that a final investment decision in the oil and gas sector, which it expects around June 2026, could shift the outlook by lifting capital inflows, domestic spending and tax revenue while improving investor confidence.
On the spending side, total expenditure is estimated at N$91.57 billion in 2025/26 and projected to decline to N$89.82 billion in 2026/27.
Domestic interest payments will rise by N$200 million to N$11.87 billion. This reflects a shift toward domestic borrowing and the rollover of two-thirds of the Eurobond locally in 2025/26. Foreign interest payments are expected to decline under this strategy.
The bank raised concern over the reduction in development spending. The development budget is projected at N$8.47 billion in 2026/27 and will rise only slightly to N$8.502 billion by 2028/29. State-funded projects will decline by N$2.23 billion to N$6.58 billion in 2026/27. Externally funded projects will fall from N$2.59 billion to N$859 million by 2028/29.
This places development spending below 2023/24 levels over the MTEF. By the end of January 2026, only 71% of the 2025/26 development budget had been executed, pointing to ongoing implementation challenges.
Standard Bank said the credibility of the fiscal framework will depend on progress under the Sixth National Development Plan, which focuses on industrialisation, logistics, energy security and inclusive growth. In the previous fiscal year, N$8.8 billion was shifted from development to operational spending due to low execution rates.
The sinking fund, used as a buffer for debt repayments, will fall from N$10.98 billion to N$1.2 billion in 2026/27 before increasing slightly over the MTEF, indicating possible redemptions.
Total public debt was revised down to N$174.56 billion from N$177.12 billion. While fiscal indicators are expected to improve, the bank warned that weak revenue and unplanned spending, including agricultural support linked to foot-and-mouth disease, could pose risks.
Caption
Minister of Finance, Erica Shafudah said a modest GDP recovery to 3.1% is projected for 2026, averaging 3.3% over the medium-term expenditure framework.
-Photo: Contributed
