EDITORIAL: Public debts will be the end of us
There is no end in sight for government borrowing, more so now that the economy continues to worsen, in part due to the Covid-19 pandemic.
Government debt currently stands at about 70% of GDP. This smashes through the 60% debt-to-GDP threshold set by the African Monetary Co-Operation Programme (AMCP) for developing economies, and the 55% debt-to-GDP ratio suggested by the International Monetary Fund (IMF).
The controversial N$4.5 billion loan from the IMF last year went against Namibia’s long-held commitment to stay as far away as possible from that lender. We are hearing that, following the agreement to increase the salaries of public servants last week, another round of borrowing is on the horizon.
Continuous borrowing – especially when there is no visible investment in the actual growth of the economy – means our country is increasingly becoming insolvent and a liability in the eyes of future lenders.
Consequently, the country becomes highly vulnerable to economic changes and government will have a reduced ability to deliver services to the people.
Debt is not unique to Namibia, but what is unique, in many ways, is the pace at which we are borrowing. Without a clear plan of economic growth to generate revenue for the state, repaying lenders will become nearly impossible.
Government debt currently stands at about 70% of GDP. This smashes through the 60% debt-to-GDP threshold set by the African Monetary Co-Operation Programme (AMCP) for developing economies, and the 55% debt-to-GDP ratio suggested by the International Monetary Fund (IMF).
The controversial N$4.5 billion loan from the IMF last year went against Namibia’s long-held commitment to stay as far away as possible from that lender. We are hearing that, following the agreement to increase the salaries of public servants last week, another round of borrowing is on the horizon.
Continuous borrowing – especially when there is no visible investment in the actual growth of the economy – means our country is increasingly becoming insolvent and a liability in the eyes of future lenders.
Consequently, the country becomes highly vulnerable to economic changes and government will have a reduced ability to deliver services to the people.
Debt is not unique to Namibia, but what is unique, in many ways, is the pace at which we are borrowing. Without a clear plan of economic growth to generate revenue for the state, repaying lenders will become nearly impossible.
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Namibian Sun
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