The burden of our debt
The debt levels of the Namibian consumer and the government are worrisome and one economist believes that the 2017 budget should address this issue head-on.
The 2017 National Budget should paint a clear picture of how government will prevent exposing future generations to a high debt servicing costs, a local economist has said.
Mally Likukela said in a statement this week that given the debt crisis of Namibia and its citizens, it will be crucial for the 2017 national budget, which is expected to be tabled next month on 8 March, to address economic sustainability.
“Namibia’s public debt grew by N$50 billion from 2010 to 2016, sparking fears among many Namibians over the sustainability of this debt stock,” said Likukela, who is also Twilight Capital Consulting managing director.
Late last year, Moody’s Investors Services downgraded Namibia’s economic outlook from stable to negative due to government debt, after Fitch Ratings did the same.
According to Likukela, managing economic sustainability will not come without hard decisions or financial rules.
“In fact, it needs a generational sacrifice.”
He said these rules are critical to demonstrate that government will honour the commitments made.
“Although we have seen government changing some of those, it is still required of them to demonstrate adherence.”
He said in the face of dwindling Southern African Customs Union (SACU) revenues and low expected domestic tax revenue, achieving financial sustainability will require that government tightly match revenue to expenditure to avoid defaulting on international debts.
“Defaulting on international debt will have a negative impact on the country’s fiscal profile.”
This, he said, will affect the Namibian economy’s ability to attract foreign direct investment.
He said the budget needs to spell out debt ceilings to avoid “digging new holes to fill old ones”.
“Achieving this requires government to make tough decisions, not only on non-essential expenditures, but also on expensive vehicles, resource wastage and corruption.”
NAMPA
Mally Likukela said in a statement this week that given the debt crisis of Namibia and its citizens, it will be crucial for the 2017 national budget, which is expected to be tabled next month on 8 March, to address economic sustainability.
“Namibia’s public debt grew by N$50 billion from 2010 to 2016, sparking fears among many Namibians over the sustainability of this debt stock,” said Likukela, who is also Twilight Capital Consulting managing director.
Late last year, Moody’s Investors Services downgraded Namibia’s economic outlook from stable to negative due to government debt, after Fitch Ratings did the same.
According to Likukela, managing economic sustainability will not come without hard decisions or financial rules.
“In fact, it needs a generational sacrifice.”
He said these rules are critical to demonstrate that government will honour the commitments made.
“Although we have seen government changing some of those, it is still required of them to demonstrate adherence.”
He said in the face of dwindling Southern African Customs Union (SACU) revenues and low expected domestic tax revenue, achieving financial sustainability will require that government tightly match revenue to expenditure to avoid defaulting on international debts.
“Defaulting on international debt will have a negative impact on the country’s fiscal profile.”
This, he said, will affect the Namibian economy’s ability to attract foreign direct investment.
He said the budget needs to spell out debt ceilings to avoid “digging new holes to fill old ones”.
“Achieving this requires government to make tough decisions, not only on non-essential expenditures, but also on expensive vehicles, resource wastage and corruption.”
NAMPA
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