Jumpstart reforms, IMF urges govt

Government should jumpstart structural reforms to enhance growth and boost job creation, the International Monetary Fund (IMF) says.The fund visited Namibia last week and released a statement on its findings yesterday.With fiscal debt rising, the government need to continue fiscal adjustments policies to stabilise debt over time, IMF said. According to Simonis Storm (SS), public debt was estimated at 48% in October 2019 and is anticipated to rise above 50% in 2020/21 financial year. The IMF said there are downside risks to the economy, which includes possible lower-than-expected revenue from the Southern African Customs Union (SACU).Fiscal slippages will undermine the government's effort to stabilise debt dynamics, the IMF warned. “Therefore, in preparation of the financial year 2020/21 budget, the government's medium-term fiscal adjustment plans and supporting policy measures should be clearly identified,” the fund said.It is important to improve the efficiency of the economy, the IMF said.'Steamline market'This includes streamlining the market operations of key public enterprises, removing obstacles that contribute to high electricity and transportation costs, and better align wage dynamics in the public sector and in the economy to reflect productivity trends.“Over time, it is important to remove obstacles to exports in order to facilitate trade and address shortages of skilled workers,” according to the IMF. The financial sector remains sound despite weak growth starting to negatively affect banks' performance. According Cirrus Securities' latest economic outlook, Namibian banks have done an “excellent job of consolidating in the current recessionary environment, with earnings remaining range bound despite economic overhang”. Cirrus expects that 2020 will see “a squeeze on the banking sector's net interest margins”. Reforms to improve the non-bank regulatory and supervisory framework are advancing, although at a slow pace, the IMF said.GrowthThe IMF's mission chief for Namibia, Geremia Palomba, said the economy is expected to grow positively following a contraction last year “as the impact of last year drought fades and mining production picks up”.The Bank of Namibia (BoN) released its latest economic outlook last week, forecasting growth of 1.5% for 2020. Cirrus maintains that the expected recovery will come from the diamond mining industry, with output expected to increase by nearly 20% to two million carats. Uranium output is expected to see “some recovery” and it is expected to grow by 17.5% in 2020. “Overall, the outlook for Namibia's mining industry for 2020 is more promising than for 2019,” Cirrus says. However, the long-term wellbeing of the industry remains a concern, the analysts say. “Many of the large-scale mining operations are nearing their full life of mine. Very few new operations are starting up and those which do are small. The mining industry plays an important role, not only in employment or revenue for the state (income tax, corporate tax, VAT, royalties), but also in foreign currency earnings through exports,” Cirrus says.phillip@nmh.com.na

Jumpstart reforms, IMF urges govt

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Jumpstart reforms, IMF urges govt

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