The International Monetary Fund (IMF) has called for urgent structural reforms to strengthen Namibia’s economic growth, following the conclusion of its 2026 Article IV consultation mission.
An IMF delegation led by Xiangming Li said Namibia must prioritise improving the business environment, accelerating permitting processes, advancing digitalisation and aligning education with labour market needs to unlock private sector-led growth.
“Structural reforms are essential to support diversification and job creation. Improving the business environment, including by expediting permitting processes and implementing a practical local content policy, would help unlock private sector-led growth,” Li said.
She added that progress on digitalisation and broader government reforms would be critical in improving efficiency and supporting economic expansion.
The IMF also backed the government’s plans for fiscal consolidation in the 2026/27 budget, including reforms to the Public Service Employees Medical Aid Scheme (PSEMAS), reduced transfers to public enterprises and tighter expenditure controls.
Li said sustained measures such as containing the public wage bill, strengthening revenue collection and improving public financial management would be key to placing public debt on a downward trajectory.
The Fund warned that Namibia’s growth outlook remains subdued in 2026, weighed down by global uncertainties, including conflict in the Middle East, which has contributed to rising fuel prices and weaker global demand.
While inflation eased to 2.4% year-on-year in February 2026, the IMF said higher fuel costs are expected to push inflation up over the course of the year.
“While inflation moderated in 2025 and has continued its decline so far this year, rising fuel prices are projected to increase inflation during the year,” Li said.
On the external front, the IMF noted a modest improvement in Namibia’s position, with the current account deficit narrowing to 13.2% of GDP in 2025 from 15.2% in 2024.
The improvement was supported by stronger uranium and gold exports, which offset weaker Southern African Customs Union (SACU) revenues and continued weakness in the diamond sector. However, the deficit is expected to remain elevated due to import demand linked to foreign direct investment in oil exploration and mining.
The IMF cautioned that public debt is projected to rise over the medium term, with the fiscal deficit widening significantly in the 2025/26 financial year.
“The fiscal deficit is estimated to have widened markedly in FY2025/26, driven primarily by a sharp decline in SACU revenues, which more than offset efforts to contain the wage bill, strengthen tax collection and reduce subsidies and transfers,” Li said.
Monetary policy has remained steady, with the Bank of Namibia maintaining the policy rate at 6.5% in February 2026. The IMF said the banking sector remains liquid and well-capitalised, with non-performing loans declining to 4.3%.
However, it urged the central bank to remain vigilant and flexible in the face of global uncertainties, particularly in maintaining the currency peg.
The Fund highlighted downside risks to the outlook, including further declines in global diamond demand, tighter financial conditions and ongoing geopolitical tensions. It said growth could improve if oil exploration projects progress or if structural reforms are implemented more rapidly.
