Diamond revenue slumps by 93%

Namibia's diamond tax and royalty revenue is expected to collapse by nearly 93%, from N$5.8 billion in 2023/24 to just N$414 million in the current financial year.Finance minister Ericah Shafudah revealed the figures in her mid-year budget review presented in the National Assembly yesterday, confirming that government has provided royalty relief to the struggling diamond industry to protect jobs and export earnings.The projected decline represents a reduction of approximately N$5.4 billion in annual diamond revenue compared with three years ago, while government estimates a cumulative shortfall of N$5.3 billion over the 2024/25 to 2026/27 medium-term expenditure framework.Mining company taxes and royalties have also been revised down by N$900 million, from N$6.1 billion to N$5.2 billion, contributing to a N$1.5 billion reduction in government's overall revenue forecast, from N$89.6 billion to N$88.1 billion.Shafudah did not disclose the value, beneficiaries or duration of the relief measures to support the diamond industry.She said government intends to diversify the economy through agriculture, downstream processing, services and renewable energy.Non-tax revenue has meanwhile been revised down from N$6.1 billion to N$5 billion, mainly because of lower mineral royalties and public enterprise dividends.N$179 million for FMDThe revenue decline comes as government ministries, offices and agencies have requested an additional N$13.1 billion to meet spending requirements during the remainder of the financial year, while the foot-and-mouth disease (FMD) outbreak remains unresolved.Economic growth for 2026 has been revised down from 3.1% to 2.3%, while the total budget appropriation is proposed to increase from N$87.9 billion to N$88.6 billion through reallocations and additional funding for priority programmes.Overall expenditure, including statutory commitments, has nevertheless been revised down from N$106 billion to N$105 billion.Among the adjustments is N$179 million to contain the FMD outbreak, funded through a 2% reduction in expenditure ceilings across government ministries and agencies.The Presidency will receive N$180 million, including N$140 million transferred from the sports ministry for basic sports facilities under regional governors and N$40 million for security measures.Defence has been allocated an additional N$200 million, divided equally between rations and utilities, while urban and rural development will receive N$62 million, including N$50 million for urgent soil erosion mitigation in Rundu and N$12 million for a 5% salary adjustment for regional councillors.Another N$50 million has been allocated to works and transport to settle outstanding government property rental obligations.Hospitals, pads and health internsThe health ministry will also receive N$41 million for 456 medical and dental interns.The gender equality and child welfare ministry will get N$12.9 million, including N$5 million for sanitary pads for vulnerable learners and the balance for early childhood development educators' allowances.The Public Service Employees Medical Aid Scheme (Psemas) will receive an additional N$535 million despite government acknowledging that its current funding model is financially unsustainable.Shafudah said reforms would address the scheme's long-term affordability, alongside stronger oversight and accountability amid allegations of fraud and abuse.The minister said government provided nearly N$740 million in fuel price relief between April and July through fuel levy reductions and price-stabilisation measures, with lower fuel levy collections contributing to the revised revenue forecast.Meanwhile, N$1.5 billion has been mobilised through the Road Fund Administration for 11 priority road projects, while N$1 billion has been mobilised through the Development Bank of Namibia for the planned 500-bed Windhoek District Hospital.The judiciary has been allocated N$28.5 million for operational requirements, salary adjustments and improved security for magistrates.Another N$26 million will settle outstanding drought relief invoices.Public debt reaches N$201.7bnNamibia's public debt is projected to reach N$201.7 billion by the end of the financial year, equivalent to 68.7% of gross domestic product.Interest payments are expected to total N$15.4 billion, consuming 17.5% of government revenue, meaning approximately N$17.50 of every N$100 collected will go towards interest before any principal debt is repaid.The budget deficit is projected at N$16.3 billion, or 5.5% of GDP, while government guarantees are expected to reach N$11.8 billion.Shafudah said government would pursue measures to stabilise debt and reduce borrowing costs, with a medium-term revenue strategy and debt management strategy expected before February 2027.By 30 September, government had spent or committed N$47 billion, representing 53.5% of the original appropriation, although development budget execution stood at just 42%.Shafudah announced a review of the zero-rating of sugar for value-added tax purposes because of health concerns, while considering removing import VAT on agricultural inputs and equipment to reduce food production costs.The tax amnesty programme will end on 31 October after 28 157 taxpayers regularised their affairs, although existing repayment arrangements will remain valid.Export levy levels are being reviewed and officials are working to shorten turnaround times for environmental clearances, exploration licences and mining licences to encourage investment.Meanwhile, the Bank of Namibia has acquired domestically produced gold valued at approximately N$878 million to diversify international reserve assets.Economic growth is expected to improve to 2.6% in 2027, supported by mining projects and favourable uranium and gold prices.However, Shafudah warned that weak global demand, particularly for diamonds, remains a major threat to the country's recovery.

Diamond revenue slumps by 93%

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Namibian Sun 2026-10-23

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Diamond revenue slumps by 93%

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Namibian Sun 2026-10-23

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