By Sostenus Wilherm
Namibia’s fiscal outlook remains fragile as slower economic growth, weakening revenue and rising debt continue to place pressure on public finances, according to a new budget review by First National Bank Namibia economist Cheryl Emvula.
The review notes that the country’s growth outlook has been revised downward, with real GDP now expected to grow by 2.9 percent in FY25/26, down from an earlier projection of 3.3 percent and 3.1percent in FY26/27, compared to a previous estimate of 3.6 percent. The slowdown reflects weaker than expected performance in key sectors such as mining, trade, transport and manufacturing.
Government revenue projections have also been revised downward as total revenue and grants are expected to reach N$87.4 billion in FY25/26, below the mid-term estimate of N$89.4 billion and lower than the N$89.1 billion collected in the previous financial year.
“Revenue performance weakened in FY25/26… prompting a third downward revision of the full-year revenue forecast to N$87.4 billion,” Emvula said.
Government spending remains elevated as total expenditure is expected to reach N$105.9 billion in FY25/26, rising slightly to N$106.0 billion in FY26/27, while operational spending alone is projected at N$80.6 billion this year.
The budget deficit is also expected to widen. According to the review, “the budget deficit is expected to widen to 6.6 percent in FY25/26,” before easing to about 5.5 percent in FY26/27 as government attempts to consolidate public finances.
Public debt is projected to continue rising, reaching N$193.8 billion in FY26/27, up from N$174.6 billion in FY25/26, while interest payments on debt are expected to consume 18.1% of government revenue.
The report stated the concern about Namibia’s dependence on domestic borrowing as the gross borrowing requirement is expected to increase significantly, rising from N$12.5 billion in FY25/26 to N$19.1 billion in FY26/27, with about 90 percent of this financing expected to come from domestic markets.
Emvula also warned that key revenue sources remain under pressure. Diamond-related tax receipts declined sharply, while value-added tax collections and corporate tax revenues have also been revised downward due to weaker economic activity.
Despite these challenges, the government plans to introduce a series of tax reforms aimed at strengthening revenue collection and improving economic competitiveness. These include adjustments to personal income tax brackets, modernising the VAT system through e-invoicing and reviewing incentives under Special Economic Zones.
The economist caution that the fiscal outlook remains vulnerable. “While Namibia’s fiscal position remains manageable in the short term, rising interest costs, slowing revenue growth and dependence on domestic borrowing point to a narrowing fiscal buffer,” Emvula said.
