IMF calls for business-friendly reforms

The International Monetary Fund (IMF) has advised Namibia to improve its tax system and regulations for starting new businesses.

This follows a consultation visit by the IMF from 25 February to 10 March.

Jaroslaw Wieczorek, deputy division chief at the IMF, said this week these adjustments are needed to reduce the country’s unemployment rate by strengthening the private sector.

“Given already high public sector employment, job creation will need to be driven primarily by the private sector.

This calls for improvements in the business climate, as well as tax and regulatory stability,” said Wieczorek.

Wieczorek said Namibia’s primary focus should be to reduce unemployment, which is currently at 36.9%.

He added that broader structural reforms are needed to support private sector growth for the benefit of the whole economy, such as “reducing the cost of doing business through streamlining visa processes [and] reducing regulatory barriers to starting a business”.

Wieczorek added that in light of oil and gas income projections, the country should implement policies that address the skills gap.

“Oil and gas exploration raises the prospect of boosting national income and to ensure that growth is broad-based and inclusive, policies that address skill gaps and improve critical infrastructure are essential,” said Wieczorek.

Additionally, he said Namibia should manage its fiscal budget carefully in the face of declining revenues from the diamond sector and uncertainty from the Southern African Customs Union.

“Going forward, maintaining fiscal discipline is crucial to keep a balance between supporting growth and job creation and ensuring that public debt remains sustainable,” said Wieczorek.

Some of the key recommendations to the government include exercising restraint over the wage bill and implementing comprehensive civil service reform, accompanied by digitalisation, that would help with fiscal consolidation and enhanced service delivery.

“Raising the efficiency of public investment and focusing it on addressing key infrastructure gaps would improve growth prospects and foster resilience and job creation,” said Wieczorek.

The IMF team has yet to provide a full report pending the board’s approval.

“Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s executive board for discussion and decision,” said Wieczorek.

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