The International Monetary Fund has called on Namibia to implement specific structural reforms including reducing the public wage bill through civil service reform, restructuring state-owned enterprises (SOEs), and tightening tax administration.
These steps, the IMF said, are critical to correcting long-standing fiscal pressures and unlocking private sector-led growth.
In its latest Article IV Consultation report, the IMF said the country must prioritise civil service reform, state-owned enterprise overhauls, and stronger public financial management to boost long-term stability and inclusive growth.
“Accelerating fiscal reforms, including enacting a comprehensive civil service reform to contain the wage bill, is essential,” the IMF Executive Board said.
The report highlights several structural weaknesses, including high unemployment, policy uncertainty, and economic exposure to weather shocks.
The IMF noted that Namibia’s economic growth declined from 5.4% in 2022 to 3.7% in 2024, primarily due to weak diamond demand and a severe drought.
“Noting the subdued growth outlook reflecting global trade policy uncertainty and domestic structural rigidities, high unemployment, and inequality, Directors emphasised the need for further efforts to harness Namibia’s economic potential,” the Board stated.
The IMF also called for increased public investment, better social protection programmes, and more resilient infrastructure. It warned that while inflation is easing, risks from global financial conditions and trade policy fragmentation remain elevated.
“Directors stressed the need to accelerate fiscal reforms… and enhancing tax administration to solidify fiscal consolidation,” the IMF said.
The Fund advised Namibia to gradually align its interest rate with that of South Africa to protect the currency peg, provided capital outflows remain under control.
“In the absence of capital outflows, Directors recommended gradually aligning the policy rate with that of the South African Reserve Bank,” the IMF Board said.
It also praised efforts by the Bank of Namibia to introduce bank resolution policies and strengthen oversight in the financial sector, including plans for counter-cyclical capital buffers.
“Directors welcomed the continued progress in enhancing financial sector resilience, notably through the introduction of the bank resolution policy,” the IMF said.
The report stressed the importance of removing Namibia from the Financial Action Task Force grey list by bolstering the anti-money laundering and counter-terrorist financing framework.
“Continued efforts to strengthen the AML/CFT framework are crucial to expedite removal from the FATF grey list,” the Board said.
