Economy on the mend
President Hage Geingob says the economy is now in better shape than last year.
President Hage Geingob believes that the economy is showing signs of recovery.
He was speaking at an information-sharing session held at State House yesterday.
According to the president, despite the technical recession that Namibia entered in the last quarter of 2016, developments locally and in the Sub-Saharan African region hold the potential to stimulate economic growth.
He said the economy was now in a better position than last year.
“While there is a lot of discourse on the state of the economy, the actual state of our economy is better than currently portrayed in the public domain. As a matter of fact, the underpinning fundamentals of the economy are stronger than they were a year ago,” said Geingob.
The president also reassured service providers and contractors that the government will settle all outstanding payments by the end of August.
“We have realised that one key factor fuelling discontent and opinion is the occurrence of unsettled invoices. We deeply regret the accumulation of unsettled invoices that came about as a result of weak revenue collection, due to the economic downturn. We understand the serious impact this has on business operations, in particular on small and medium sized enterprises. We sympathise with those businesses that had to close down as a result of the economic downturn and those employees who lost jobs as a result of such foreclosures,” said Geingob.
He acknowledged that 2016 had been tough but said the government's fiscal consolidation stance had helped the economy weather the storm.
“It is true that 2016 was one of the most challenging years for Namibia from an economic growth point of view. This notwithstanding, Namibia's fiscal consolidation plan is deemed to be credible and is acknowledged by independent observers such as rating agencies,” he said.
According to Geingob, the economy is now on the mend. “We believe the economy has been through the brunt of the downturn and is now on a recovery path.”
Developments in the domestic economy which showed that the economy had recovered included a subdued inflationary environment, improvements in the lending space by consumers and revived building activity witnessed in the construction sector.
“Most important is the fact that food price inflation is much lower that it was during the same period last year. This means low-income earners, who spend relatively more of their income on food items, are relatively shielded from the full impact of inflation compared to the same period last year,” said Geingob.
“Some demand indicators such as monthly credit extension by commercial banks, monthly vehicle sales and monthly statistics on building plans approved are starting to show and confirm a modest recovery,” he added.
The African Development Bank loan facility that had been recently accessed by the government also helped alleviate its cash-flow problems, he noted.
“Liquidity conditions have improved remarkably. A credit facility with the African Development Bank, denominated in South African rand and at favourable terms, has immensely contributed to the improved liquidity situation in the country,” said Geingob.
He defended public expenditure cuts, which according to him were the harshest since Independence. Had the cuts not been carried out, public debt would have risen considerably.
“We instituted some of the deepest fiscal cuts since Independence to rescue the economy and put it on a sustainable long-term growth trajectory.
“These include the shelving of the Kudu Gas to Power project, the construction of the Hosea Kutako international airport and the construction of a new parliament,” said Geingob.
“Had these projects proceeded as planned, the costs incurred could have crippled the economy.”
Geingob said his office showed commitment to the budget cuts.
“We have significantly reduced the travel and subsistence allowance budget. In my own office, I have only travelled twice this year, to two African countries, and no travel has been undertaken outside Africa,” Geingob said.
He also said that growth was more inclusive and that more Namibians were able to benefit.
“Despite low growth in 2016, such growth was more shared than in previous years. This is owing to our strong commitment to eradicate poverty.”
Namibia slid into a technical recession toward the end of 2016 following the government's fiscal consolidation stance undertaken after finance minister Calle Schlettwein's mid-year budget review.
The domestic economy contracted by 1% in the third quarter of 2016, compared to a growth of 5% recorded in the corresponding quarter of 2015, according to the Namibia Statistics Agency (NSA).
The real Gross Domestic Product for the third quarter of 2016 recorded a contraction of 1% compared to a 5% growth registered in the corresponding quarter of 2015.
The poor performance was mainly attributed to the mining and quarrying, construction, and public administration sectors, which contracted by 5.6%, 12.3 % and 5.3 % respectively in real value added.
In addition, year on year, wholesale and retail trade, electricity and water and health sectors slowed down to register 3.6%, 5.3 % and 4.1 % in real value added, the NSA said.
Data released by the NSA showed that the wholesale and retail trade, electricity and water and health sectors all recorded slower growth in real value added of 3.6%, 5.3 % and 4.1 % in the third quarter of 2016, compared to strong growth of 4.9%, 7.5% and 6.6% in the corresponding quarter of 2015.
OGONE TLHAGE
RECOVERY: Construction has driven growth in the past.
Photo: YANNA SMITH
He was speaking at an information-sharing session held at State House yesterday.
According to the president, despite the technical recession that Namibia entered in the last quarter of 2016, developments locally and in the Sub-Saharan African region hold the potential to stimulate economic growth.
He said the economy was now in a better position than last year.
“While there is a lot of discourse on the state of the economy, the actual state of our economy is better than currently portrayed in the public domain. As a matter of fact, the underpinning fundamentals of the economy are stronger than they were a year ago,” said Geingob.
The president also reassured service providers and contractors that the government will settle all outstanding payments by the end of August.
“We have realised that one key factor fuelling discontent and opinion is the occurrence of unsettled invoices. We deeply regret the accumulation of unsettled invoices that came about as a result of weak revenue collection, due to the economic downturn. We understand the serious impact this has on business operations, in particular on small and medium sized enterprises. We sympathise with those businesses that had to close down as a result of the economic downturn and those employees who lost jobs as a result of such foreclosures,” said Geingob.
He acknowledged that 2016 had been tough but said the government's fiscal consolidation stance had helped the economy weather the storm.
“It is true that 2016 was one of the most challenging years for Namibia from an economic growth point of view. This notwithstanding, Namibia's fiscal consolidation plan is deemed to be credible and is acknowledged by independent observers such as rating agencies,” he said.
According to Geingob, the economy is now on the mend. “We believe the economy has been through the brunt of the downturn and is now on a recovery path.”
Developments in the domestic economy which showed that the economy had recovered included a subdued inflationary environment, improvements in the lending space by consumers and revived building activity witnessed in the construction sector.
“Most important is the fact that food price inflation is much lower that it was during the same period last year. This means low-income earners, who spend relatively more of their income on food items, are relatively shielded from the full impact of inflation compared to the same period last year,” said Geingob.
“Some demand indicators such as monthly credit extension by commercial banks, monthly vehicle sales and monthly statistics on building plans approved are starting to show and confirm a modest recovery,” he added.
The African Development Bank loan facility that had been recently accessed by the government also helped alleviate its cash-flow problems, he noted.
“Liquidity conditions have improved remarkably. A credit facility with the African Development Bank, denominated in South African rand and at favourable terms, has immensely contributed to the improved liquidity situation in the country,” said Geingob.
He defended public expenditure cuts, which according to him were the harshest since Independence. Had the cuts not been carried out, public debt would have risen considerably.
“We instituted some of the deepest fiscal cuts since Independence to rescue the economy and put it on a sustainable long-term growth trajectory.
“These include the shelving of the Kudu Gas to Power project, the construction of the Hosea Kutako international airport and the construction of a new parliament,” said Geingob.
“Had these projects proceeded as planned, the costs incurred could have crippled the economy.”
Geingob said his office showed commitment to the budget cuts.
“We have significantly reduced the travel and subsistence allowance budget. In my own office, I have only travelled twice this year, to two African countries, and no travel has been undertaken outside Africa,” Geingob said.
He also said that growth was more inclusive and that more Namibians were able to benefit.
“Despite low growth in 2016, such growth was more shared than in previous years. This is owing to our strong commitment to eradicate poverty.”
Namibia slid into a technical recession toward the end of 2016 following the government's fiscal consolidation stance undertaken after finance minister Calle Schlettwein's mid-year budget review.
The domestic economy contracted by 1% in the third quarter of 2016, compared to a growth of 5% recorded in the corresponding quarter of 2015, according to the Namibia Statistics Agency (NSA).
The real Gross Domestic Product for the third quarter of 2016 recorded a contraction of 1% compared to a 5% growth registered in the corresponding quarter of 2015.
The poor performance was mainly attributed to the mining and quarrying, construction, and public administration sectors, which contracted by 5.6%, 12.3 % and 5.3 % respectively in real value added.
In addition, year on year, wholesale and retail trade, electricity and water and health sectors slowed down to register 3.6%, 5.3 % and 4.1 % in real value added, the NSA said.
Data released by the NSA showed that the wholesale and retail trade, electricity and water and health sectors all recorded slower growth in real value added of 3.6%, 5.3 % and 4.1 % in the third quarter of 2016, compared to strong growth of 4.9%, 7.5% and 6.6% in the corresponding quarter of 2015.
OGONE TLHAGE
RECOVERY: Construction has driven growth in the past.
Photo: YANNA SMITH
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