Rein in the borrowing

29 April 2020 | Opinion

The subject of Namibia’s public debt – which is soaring like an eagle - hardly finds itself on anyone’s lips. Yet the figures are staggering.

At the beginning of 2020, debt stood at 53% of the country’s GDP. In exact monetary terms, the country owed N$93 billion.

We have a crisis on our hands and yet no one seems to realise how deep in trouble we are. When rating agencies downgrade our economy, in part due to the level of our debts, government officials become defensive and continue borrowing unabated.

Namibia’s social spending has worsened in recent years and a great chunk of borrowed money is channelled towards such spending.

Borrowed money should ideally be used to spur growth through the creation of wealth and jobs. When people have jobs to feed their families and send their children to school, the government’s social spending burden lessens.

Borrowing is a normal international practice. The USA, the largest economy in the world, borrows too. But spending priorities have to be right and sustainable.

The narrative, perpetually chiefly by former finance minister Calle Schlettwein, that our debt levels are still within SADC thresholds cannot be accepted.

We don’t have to exceed all thresholds before we realise how reckless our borrowing is. Particularly not when there is nearly nothing to show for how the borrowed money was used in terms of improved economic activity.