THE International Monetary Fund (IMF) has started assessing the strength of the Namibian economy and the state’s ability to repay the N$4,5 billion loan facility the country applied for last month.
This was revealed by Ministry of Finance spokesperson Tonateni Shidhudhu, who said the fund notified the ministry that the application has been received.
“I confirm that the IMF has acknowledged receipt of our application to access funding through the Rapid Financial Instrument to address the impact of Covid-19, and they are currently conducting a country assessment before taking the matter to the board for consideration,” he said.
Treasury approached the Washington-based fund last month to secure a N$4,5 billion facility to redress the economic fallout caused by the Covid-19-imposed lockdown.
It is the first time Namibia has applied for assistance from the fund since becoming a member in September 1990.
The application was made through the Rapid Financial Instrument (RFI) programme offered by the IMF to provide fast financial assistance – especially when faced with an urgent balance of payments need, without the need to have a fully fledged programme in place.
Fully fledged assistance programmes normally come with very strict conditions.
To date, the IMF has given financial assistance to over 30 African countries.
The application, when publicised, was received with ambivalence, with the main opposition party citing there was no need for treasury to apply for a loan from the fund.
Officials in the ministry last month said the state has also applied for another loan from the African Development Bank and will compare conditions attached to the two loans to accept the more affordable one with the least strict conditions.
Former prime minister Nahas Angula said before the country takes on a loan from the fund, indebtedness should be examined first.
Shidhudhu said before the agreement is finalised, the Cabinet will review its terms.
Namibia’s creditworthiness and outlook is negative, according to the two credit-rating agencies Moody’s Investors Service and Fitch Ratings that opine on governments debt and economy to investors.
While tabling the national budget this year, minister of finance Iipumbu Shiimi said government debt is expected to shoot past N$100 billion this year, settling at N$117 billion.
This will mainly be driven by expected reduced government revenue, and an expanded budget deficit of N$21 billion. Shiimi said the plan is to source at least N$10,4 billion of the shortfall from the Namibian capital market, and the remainder is set to be drawn from savings and external borrowing.
The IMF has in the past been accused of paralysing the sovereignty of nations with conditions they attach to loans, but the RFI is said to be friendly.
Some analysts believe the RFI is the first step towards the slippery slope of submission.
Neighbouring South Africa’s request for N$70 billion was approved late last month after almost 21 years of not asking for help.
