Budget shortfall hits N$3.2 billion

Minister of finance Ericah Shafudah yesterday said, in terms of current projections, a shortfall of N$3.2 billion in government revenue during the 2025/26 financial year is expected.

Economic growth is expected to slow down to 3.3% in 2025 compared to the initial estimates of 4.5% in the 2025/26 main budget.

“We are projecting to realise a shortfall in revenue to the tune of N$3.2 billion for the 2025/26 fiscal year. In addition, given the low execution rates on capital projects, N$826.4 million has been identified for reallocation, with potential realised savings from vacant positions across offices, ministries and agencies (OMAs) of N$378.6 million for the 2025/26 fiscal year,” she said.

Public debt reached N$176.3 billion by the end of September, and the government will have to rein in spending during the mid-term period to keep public finances viable and manageable, Shafudah said.

She announced this in the National Assembly during the mid-term budget review, adding that debt servicing costs during 2025/26 are revised upwards, from N$13.7 billion – 14.8% of government revenue – to N$14.3 billion (16.1% of revenue).

She said during the mid-year fiscal assessment for the 2025/26 financial year, the revenue outturn reached N$36.6 billion, constituting 40% of the total budget estimates by end of September.

She said the government’s increasing debts are compounded by a “significant increase” in debt servicing costs.

She added that the government’s contingent liabilities, though, have shown a “marginal improvement” during the current financial year, with government guarantees decreasing to N$8.1 billion, compared to N$9.3 billion at the same time during the 2024/25 financial year.

Shafudah announced that out of the N$1.2 billion reallocation budget for identified OMAs, the ministries of education and health received the largest portions at N$814 million and N$185 million, respectively.

Economic Association of Namibia chief executive Cons Karamata says the allocation is largely for tertiary fees and teacher recruitment, adding that the N$185 million addition to health for the recruitment of over 1 500 health personnel demonstrates targeted investment in human capital and essential social infrastructure.

“These reallocations ensure that resources follow national priorities, especially in areas that deliver high developmental returns,” says Karamata.

He adds that improving execution capacity on development projects – especially in infrastructure, logistics, land servicing, water, electricity, agro-processing and youth enterprise systems – will be essential to unlock employment creation envisaged under Namibia’s policy frameworks.

Association for Localised Interests president Josef Kauandenge says it is disheartening that while Namibia struggles with high levels of unemployment, especially among the youth, those responsible for capital projects continue to underspend the development budget.

“This is the area where job opportunities should be created,” he says.

He adds that the high public debt could lead to a situation where the government will no longer service this public debt with its own resources and this is a burden that will be passed on to future generations to deal with it. Meanwhile, Rally for Democracy Party president Mike Kavekotora yesterday told The Namibian that the economic outlook is concerning in that the projected growth will not materialise, and the economy is performing weaker in comparison to the global outlook. That has led to a drop in revenue projections.

Allocating 75% of the budget to operations and then taking away from the development budget due to a low execution rate, he said, has been the trend. He added that this is worrisome, and that it cannot be allowed to continue unabated.

He cautioned the nation to prepare for difficult times, as the outlook is not promising and nothing is proposed in terms of policy that could give comfort to the nation

Economist Mali Likukela yesterday said the consistency of the government in directing resources towards the social sector confirms the governments’ commitment towards social development.

He added that the fiscal policy signals also provided the much needed assurance to the business community – a critical partner in the implementation of fiscal policy.

While the review did not introduce ground-breaking reforms, he said, the tone and context of the speech will definitely sit well with the business sector, eventually reinforcing confidence in the fiscal policy and restoring the budget’s credibility, which is under attack from low execution rates.

Earlier in March, the national budget was N$106.1 billion with a projected 4.9% increase in spending compared to the previous year. The operational expenditure budget was N$79.8 billion and development expenditure N$9.6 billion, while the debt servicing stood at N$13.7 billion.

In terms of winners, N$814 million was allocated to the Ministry of Education, Innovation, Youth, Sport, Arts and Culture, of which N$663 million is to cater for registration fees and tuition fees for the first quarter (January-March 2026) in line with the approved stance on subsidised free tertiary education.

The other N$151 million is for the recruitment of 665 teachers.

The Ministry of Health and Social Services is the second winner, following an allocation of N$185 million made available for the recruitment for 1 537 health personnel.

An amount of N$61 million is availed to the Ministry of Finance under contingency provision and an addition of N$50 million to the Office of the President to cater for personnel expenditure and related goods and services for the oil and gas unit, security equipment and maintenance.

The replenishment of the National Emergency Disaster Fund under the Office of the Prime Minister received N$50 million to cater for the increased turnout of beneficiaries in the concluded drought relief programme. The Electoral Commission of Namibia will receive N$30 million to cater for the shortfall caused by additional by-elections during the 2025/26 fiscal year.

The National Assembly is to receive N$15 million to cater for a shortfall on personnel expenditure and parliamentary committees’ oversight, and a further N$30 million to purchase an office building for members of parliament.

The Ministry of Agriculture, Fisheries, Water and Land Reform, Ministry of Justice and Labour Relations, and Ministry of Gender Equality and Child Welfare all missed out on additional allocations.

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