Limping Namibia ducks IMF loan
The country's public debt rose from N$14 billion in 2011 to N$93 billion in 2019, smashing all thresholds in sight.
28 April 2020 | Local News
In a bid to avoid further heightening public debt, which stood at 53% of the gross domestic product (GDP) in January, Namibia has so far resisted the temptation to approach the International Monetary Fund (IMF) to finance the national budget or the war against coronavirus.
Total government debt stock stood at N$93.2 billion at the end of 2019, representing an increase of 7.5% compared to the end of 2018. Namibia's debt level, at N$13.8 billion in 2011, skyrocketed to N$72.8 billion at the end of 2017, representing 40.6% of GDP.
Neighbours South Africa recently accessed an IMF loan to fund a N$500 billion stimulus package it rolled out due to the coronavirus pandemic.
The IMF, notoriously known for removing the fiscal autonomy of countries it lends to, recently availed a US$50 billion war chest to help countries fight the pandemic.
IMF boss Kristalina Georgieva said the impact of the coronavirus on the global economy is set to significantly increase.
“The IMF is making available about US$50 billion through its rapid-disbursing emergency financing facilities for low-income and emerging-market countries that could potentially seek support,” she said.
Namibia has, seemingly for the moment, delayed accessing any funding from the IMF and will for the time being fund its coronavirus efforts on revenues generated thus far, the finance ministry said.
“It has been a standing position for Namibia not to borrow from those institutions, given their adverse terms. What I can say so far is that we have not applied for anything yet. We are using our own source of revenue,” ministry spokesperson Tonateni Shidhudhu said.
Namibia's debt levels rose from N$13.8 billion, or 16.4% of the GDP, in early 2011 to N$72.8 billion at the end of 2017, which is 40.6% of the GDP. The IMF, in a paper on Namibia, noted that debt levels were high and government needed to reign in its appetite to take up more credit.
“Public debt remains on a rising path, and government's growth financing needs are elevated,” it said. Namibia was downgraded by rating agency Fitch to sub-investment grade in October 2019, further eroding the country's ability to borrow money.
The European Union recently gifted Namibia N$172 million, while the United States through its embassy in Windhoek availed N$100 million.
The EU pledged the grant without conditionalities.
EU ambassador to Namibia Sinikka Antila said such funding would be availed to the Namibian government to, among others, strengthen the country's health system and enhance resilient and responsive health and social protection systems.
US ambassador Lisa Johnson said her country's grant would go towards strengthening Namibia's lab testing capabilities.