The Ministry of Finance says it forecasts growth of 1.9% for 2021, a downward revision from 2.1%, compared to 1.4% by the Bank of Namibia and 1.3% forecasted by the International Monetary Fund (IMF).
“The revision reflects low base effects and slightly lower production prospects, compounded by the rampant third wave of the COVID-19 pandemic and the subsequent restrictive measures introduced to contain the spread of the virus,” Finance minister Iipumbu Shiimi said in his Budget Review Statement on Wednesday.
“While the domestic economy is estimated to return to a positive growth trajectory, that growth is still not strong enough to regain the revenue prospects lost during the recession and pandemic periods.”
Growth , according to the Finance minister, is projected to accelerate further to 2.8% by 2022 and further strengthen to an average of 3% over the next Medium Term Expenditure Framework (MTEF).
“On the growth front, there are bright prospects for the medium-term albeit rather moderate. Anchored on assumption that the COVID-19 pandemic will remain contained. From the sectors of industry viewpoint, all major industry sectors are expected to record growth in 2022, although some will be moderate in comparison to 2021.”
The country’s total revenue and grants for FY2022/23 are projected at N$53.9 billion, a mere 0.5% higher than the estimated revenue for FY2021/22, attributed lower SACU receipts and excluding proceeds from the MTC IPO.
“Over the MTEF, revenue is expected to grow moderately at an average pace of 5.7 percent to reach N$60.6 billion in FY2023/24 and N$63.1 billion by FY2024/25, reflecting the pace of economic recovery. As a proportion of GDP, total revenue is projected to average around 28.5 percent of GDP over the MTEF, still lower than the long-term average,” the Finance minister said.
“The total expenditure ceiling is projected to reduce to N$68.3 billion in FY2022/23 and remain steady thereabout over the remainder of the MTEF.”
The budget deficit is projected to reduce to about 7.4% of GDP in FY2022/23 and average about 4.7% of GDP over the MTEF, reaching about 3% of GDP in FY2024/25.
“The projected budget deficit is still relatively high, particularly in FY2022/23 and public debt as a percentage of GDP is projected to increase from 68.7% in FY2021/22 and peak at 74.2% by FY2023/24. These high debt levels remain a real concern in the medium term.,” Shiimi said.
The country’ preliminary revenue outturn by September 2021 stood at N$27.2 billion, equivalent to 52 percent of the budgeted revenue and about 4% better than the average historical mid-year collection rate.
At the half-year mark, the country’s total debt stock stood at N$126.1 billion, equivalent to 68.3 percent of GDP.
“This amount is inclusive of US$500 million outstanding on the first Eurobond, which I am pleased to note has been successfully redeemed today, 3 November 2021. The debt stock reflects that 57 percent of the budgeted financing requirements has been effectively met by the mid-year point,” Shiimi said.
