IMF gives Namibia pat on back, but warns against extravagance

THE International Monetary Fund (IMF) has commended Namibia for its fiscal status and economic developments, but has also warned of issues which need to be tackled for better economic growth.

An IMF mission carrying out an annual review announced yesterday that economic developments, although positive, could be hampered by a number of socio-economic challenges ranging from high unemployment to widespread poverty and a high prevalence of HIV-AIDS. “Namibia’s medium-term economic outlook remains promising, as long as it sustains prudent macro-economic policies and tackles a number of challenges.”This was said by the head of the delegation, Johannes Mueller, who is the advisor in the IMF African Department, at a press conference in Windhoek.The mission was pleased with the fiscal policy implemented by the Finance Ministry over the past two years, which has reduced Government’s budget deficit.Namibia is expected to realise its first budget surplus since 1990 this year, as a result of a windfall from the Southern African Customs Union (Sacu).When Finance Minister Saara Kuugongelwa-Amadhila tabled the Additional Budget for 2006-2007 in the National Assembly last week, she said a budget surplus of N$921 million was expected.The IMF delegation sounded a warning in this regard, however.”(T)he projected medium-term fiscal pressures would have made it desirable to use a larger share of this windfall for public debt reduction,” Mueller said.”With respect to the supplementary budget for 2006-07, the mission stressed the importance of not adding additional spending during parliamentary deliberations in light of the expected significant medium-term fiscal pressures.”Government was also instructed to improve its revenue collection and tax administration, and to reform its civil service.Said Mueller: “The mission is mindful of the required increased outlays for health, education, poverty reduction and infrastructure investment.In particular, more determined efforts are needed to reduce poverty so as to maintain social cohesion.”To achieve these objectives, there is urgent need to adopt an effective medium-term strategy away from wages and subsidies toward priority sectors.”He added that the delegation had also discussed with the Ministry of Finance ways to create investment opportunities and curb the outflow of capital.Kuugongelwa-Amadhila said Government welcomed the IMF’s assessment and recommendations and would find ways to use the expertise to bolster economic development.She said revenue collection was a core function of Government, adding that outsourcing the job to the private sector, as happened at present, was a ‘temporary measure’.The IMF team visited Namibia between November 6 to 14 to conduct the country’s annual review, and met various representatives of Government, central bank, private sector, non-governmental organisations, unions, National Assembly, academia and the diplomatic corps.Mueller said co-operation between the IMF and Namibia was good.The IMF does annual checks on its 184 member countries to review their economic status.”Namibia’s medium-term economic outlook remains promising, as long as it sustains prudent macro-economic policies and tackles a number of challenges.”This was said by the head of the delegation, Johannes Mueller, who is the advisor in the IMF African Department, at a press conference in Windhoek.The mission was pleased with the fiscal policy implemented by the Finance Ministry over the past two years, which has reduced Government’s budget deficit.Namibia is expected to realise its first budget surplus since 1990 this year, as a result of a windfall from the Southern African Customs Union (Sacu).When Finance Minister Saara Kuugongelwa-Amadhila tabled the Additional Budget for 2006-2007 in the National Assembly last week, she said a budget surplus of N$921 million was expected.The IMF delegation sounded a warning in this regard, however.”(T)he projected medium-term fiscal pressures would have made it desirable to use a larger share of this windfall for public debt reduction,” Mueller said.”With respect to the supplementary budget for 2006-07, the mission stressed the importance of not adding additional spending during parliamentary deliberations in light of the expected significant medium-term fiscal pressures.”Government was also instructed to improve its revenue collection and tax administration, and to reform its civil service.Said Mueller: “The mission is mindful of the required increased outlays for health, education, poverty reduction and infrastructure investment.In particular, more determined efforts are needed to reduce poverty so as to maintain social cohesion.”To achieve these objectives, there is urgent need to adopt an effective medium-term strategy away from wages and subsidies toward priority sectors.”He added that the delegation had also discussed with the Ministry of Finance ways to create investment opportunities and curb the outflow of capital.Kuugongelwa-Amadhila said Government welcomed the IMF’s assessment and recommendations and would find ways to use the expertise to bolster economic development.She said revenue collection was a core function of Government, adding that outsourcing the job to the private sector, as happened at present, was a ‘temporary measure’.The IMF team visited Namibia between November 6 to 14 to conduct the country’s annual review, and met various representatives of Government, central bank, private sector, non-governmental organisations, unions, National Assembly, academia and the diplomatic corps.Mueller said co-operation between the IMF and Namibia was good.The IMF does annual checks on its 184 member countries to review their economic status.