Fiscal constraints set to shape Namibia’s 2026/27 national budget

Namibia’s 2026/27 national budget is expected to be shaped by tightening fiscal constraints, with economists warning that weaker-than-anticipated revenue collections could limit government spending capacity, place pressure on the deficit, and force difficult policy trade-offs.

The outlook emerged during a high-level discussion hosted by the Economic Association of Namibia (EAN) in partnership with Capricorn Group and the Hanns Seidel Foundation under the theme ‘The National Budget at a Pivotal Moment: Choices, Trade-offs and Economic Direction’.

Chief economist at Capricorn Asset Management Floris Bergh said limited revenue growth is likely to leave the government with minimal fiscal space at a time when expenditure demands remain elevated.

“The budget is a difficult one. There is very little breathing room on the revenue side, and if expenditure pressures are not controlled, we could end up with a deficit larger than the preferred 3% of gross domestic product,” Bergh said.

He said domestic capital markets had already experienced significant borrowing demand over the past year, highlighting the importance of maintaining disciplined fiscal management going forward.

High Economic Intelligence (HEI) managing director and EAN associate member Salomo Hei said the government faces a delicate balancing act between revenue performance and expenditure commitments.

“If revenue declines, expenditure will also be affected. The government must manage what it can spend within the budget balance.

“That is where the balancing act lies,” Hei said.

He said encouraging private sector investment would be essential to sustaining economic growth under a constrained fiscal environment.

“We hope to see stronger emphasis on investment promotion and participation trends, because that is a potential game changer for the investment economy,” he said.

Standard Bank Namibia group economist Helena Mboti said the upcoming budget is expected to provide greater clarity on fiscal policy direction, regulatory reforms and measures aimed at stimulating economic activity while preserving fiscal stability.

“We expect more policy clarity, particularly around investment frameworks, to stimulate economic development and support fiscal stability,” she said.

Mboti said the budget may also outline sector-specific support measures, including initiatives to improve public service efficiency and targeted social spending.

“I expect some expansion into key projects and hopefully more guidance on operational policies, which could strengthen economic activity without compromising fiscal discipline,” she said.

EAN vice chairperson Jesaya Hano-Oshike emphasised the need for improved prioritisation of existing resources, even if overall budget growth remains limited.

“Even if the budget does not grow significantly, the funds available must be well spent on activities that build the economy, create employment and improve public service efficiency,” he said.

Panellists also indicated that infrastructure investment, fiscal incentives to encourage private-sector participation and strategic allocation of resources to key social and economic priorities are likely to feature prominently in the budget.

The discussion reflected broad consensus among economists that managing expenditure pressures, safeguarding fiscal stability, promoting investment-friendly policies and improving spending efficiency will be critical as Namibia navigates a constrained fiscal environment.

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