Blacklisting may haunt Namibia
While the ministry of finance is calling for calm as it is re-engaging the European Union regarding its decision to blacklist Namibia, concerns are lingering, as there may be potential funding risks for parastatals.
Finance minister Calle Schlettwein could not be reached for comment yesterday. However, well-placed sources within the ministry said the minister was trying to re-engage the EU on the matter but was not ready to talk to the media about it.
Namibia was labelled as a tax haven in December last year.
Schlettwein told the media in December that the government had been promised technical assistance and granted time to sort out the issue.
Although Schlettwein insisted that EU funding was still intact, he admitted that the blacklisting tarnished the country's good name, making it a potential target for sanctions.
According to the EU, the 17 countries on its blacklist are those whose tax regimes are deemed unable or unwilling to effectively control taxes and allowed illicit financial flows.
Meanwhile, concerns regarding the sourcing of external funding for the government and, in particular its parastatals, are lingering.
There is also talk in financial circles that Namibia may get more bad news in the next few days that could jeopardise its ability to source funding for projects.
Economist Klaus Schade believes there is no reason for concern.
“The current listing does not have a direct impact except for our reputation that is being tarnished.
The development assistance is not affected and we would still be able to access funding.
“We need to address certain issues the EU has raised in order to be removed from the current list,” he said.
A commentary note on the EU blacklisting states that the most significant and disastrous consequence the move might have for Namibia is a ban on access to EU funds by all Namibian institutions.
This means that Namibian institutions would not be able to receive funding from any EU institution, or intermediaries managing EU funds.
The note also states that loans already issued by these institutions could be recalled.
That includes, but is not limited to, institutions such as the EU itself, the German and European development banks, European embassies and development agencies.
“Innumerable examples exist as to local institutions that may be negatively impacted by these bans, including the Namibian government herself, outstanding and expected AfDB loans, EU-based holders of Namibia's Eurobonds and similar, NamPower (extensive debt funding sourced from the EU or EU-based entities), NamPort (port expansion funding, indirectly, from EU-linked sources), local commercial banks (various funding from EU-based sources),” the note further reads.
Schade, however, said these measures were the “extreme case, when we have failed to comply with measures by the set deadline.”
He also emphasised that the Namibian government was consulting with the EU in order to address the concerns.
Leon Jooste, state-owned enterprises minister agrees with Schade. “EU-based financial institutions follow their own individual due diligence processes and it is presumptuous to assume that Namibian public enterprises will no longer be able to access these financial instruments.
Namibia has a supreme record of abiding by international laws, decrees and conventions and there is no reason for the EU, or any other global grouping for that matter, to question our continuous commitment to maintain that record, he told Namibian Sun.
He added that they are “keeping an eye on the situation and if required, alternative avenues will be explored for our public enterprises”, saying that the government will want to resolve the issues with the EU “as a matter of principle”.
STAFF REPORTER
Finance minister Calle Schlettwein could not be reached for comment yesterday. However, well-placed sources within the ministry said the minister was trying to re-engage the EU on the matter but was not ready to talk to the media about it.
Namibia was labelled as a tax haven in December last year.
Schlettwein told the media in December that the government had been promised technical assistance and granted time to sort out the issue.
Although Schlettwein insisted that EU funding was still intact, he admitted that the blacklisting tarnished the country's good name, making it a potential target for sanctions.
According to the EU, the 17 countries on its blacklist are those whose tax regimes are deemed unable or unwilling to effectively control taxes and allowed illicit financial flows.
Meanwhile, concerns regarding the sourcing of external funding for the government and, in particular its parastatals, are lingering.
There is also talk in financial circles that Namibia may get more bad news in the next few days that could jeopardise its ability to source funding for projects.
Economist Klaus Schade believes there is no reason for concern.
“The current listing does not have a direct impact except for our reputation that is being tarnished.
The development assistance is not affected and we would still be able to access funding.
“We need to address certain issues the EU has raised in order to be removed from the current list,” he said.
A commentary note on the EU blacklisting states that the most significant and disastrous consequence the move might have for Namibia is a ban on access to EU funds by all Namibian institutions.
This means that Namibian institutions would not be able to receive funding from any EU institution, or intermediaries managing EU funds.
The note also states that loans already issued by these institutions could be recalled.
That includes, but is not limited to, institutions such as the EU itself, the German and European development banks, European embassies and development agencies.
“Innumerable examples exist as to local institutions that may be negatively impacted by these bans, including the Namibian government herself, outstanding and expected AfDB loans, EU-based holders of Namibia's Eurobonds and similar, NamPower (extensive debt funding sourced from the EU or EU-based entities), NamPort (port expansion funding, indirectly, from EU-linked sources), local commercial banks (various funding from EU-based sources),” the note further reads.
Schade, however, said these measures were the “extreme case, when we have failed to comply with measures by the set deadline.”
He also emphasised that the Namibian government was consulting with the EU in order to address the concerns.
Leon Jooste, state-owned enterprises minister agrees with Schade. “EU-based financial institutions follow their own individual due diligence processes and it is presumptuous to assume that Namibian public enterprises will no longer be able to access these financial instruments.
Namibia has a supreme record of abiding by international laws, decrees and conventions and there is no reason for the EU, or any other global grouping for that matter, to question our continuous commitment to maintain that record, he told Namibian Sun.
He added that they are “keeping an eye on the situation and if required, alternative avenues will be explored for our public enterprises”, saying that the government will want to resolve the issues with the EU “as a matter of principle”.
STAFF REPORTER
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