International monetary fund (IMF) visited Namibia and found that the domestic economy has grown drastically. However, due to many adjustment phases, it might experience a slight negative decline in 2017 after growing by 1.1 percent in 2016. The negative rate of growth is attributed to the completion of many construction projects like mining in 2017 and government fiscal consolidation.
Geremia Palomba who headed the article IV of the regular IMF assessments on Namibia mentioned that although the country ranks high in Africa, it still has a big room for improvement especially in the ease of doing business. He posited that growth might resume in 2018 and remain on an upward trajectory up to about 4% as production in the mines commences and retail and manufacturing sectors recover. In a joint media briefing attended by the governor of the Bank of Namibia Iipumbu Shiimi and the minister of finance Calle Schlettwein, Palomba highlighted the risks that face the expected growth. These included subdued prices of commodities, Southern African Customs Union (SACU) revenue being volatile and fiscal slippages likely to undermine the credibility of policies.
According to Palomba, the main economic goals of the country should be to manage the current adjustments, minimising unemployment, reducing income inequality and sustain the current macroeconomic stability. The bank of Namibia has put measures to sustain financial stability and decrease the fiscal deficit, but external and fiscal risks are increasing demanding more action.
As mentioned by Palomba, the country has a sound financial sector, but the national wage bill that is increasing by 20% annually needs policy intervention. Several steps have been taken by the relevant authorities to reduce the risks and foster important reforms. These include increasing the banks’ ability to monitor liquidity and classify assets, widening the macro-prudential toolkit, entrenching a bank resolution regime, and strengthening the non-bank framework for supervising and regulating economic activities.
Palomba encouraged that the above steps will reduce the structural and macro-financial risks especially the weakness of non-banking and banking sectors, manage the increasing prices of real estates, complex linkages between financial institutions, and increasing household indebtedness. The financial institutions need to provide small enterprises and people in rural areas with finances. Palomba noted the government effort to reduce youth unemployment, income inequality, and foster economic growth. He mentioned that solving the shortage of skilled workforce, matching productivity with wages, and relaxing the regulations for doing business would increase job creation and improve economic growth.
