On 26 February, minister of finance Ericah Shafudah tabled the 2026/27 financial year (FY) national budget under the theme, ‘People, Productivity and Prudence,’ amid a sluggish economy.
The minister highlighted that the global outlook remains uncertain, with the International Monetary Fund (IMF) having expected global growth to reach 3.3% in 2025 and remain stagnant in 2026 before easing to 3.2%.
Growth is expected to be anchored by emerging market economies, while sub-Saharan Africa is projected to grow by 4.4% in 2025, rising to 4.6% in 2026 and 2027.
In contrast, advanced economies (key export destinations for Namibia from a commodity perspective) are expected to weaken from 1.8% in 2026 to 1.7% in 2027.
With upward inflation averaging 3.5% in 2026 (unchanged compared to the average experienced in 2025) alongside weaker gross domestic product (GDP), Growth for 2025 was revised down from 3.3% to 2.9%. Recovery is projected at 3.1% in 2026, (averaging 3.3% over the medium-term expenditure framework (MTEF) notably below 2024’s growth of 3.7%.
This weaker outlook adds risk to the governments fiscal plan from a tax revenue perspective.
REVENUE
Revenue growth remains constrained by weak global, regional and domestic activity.
Total revenue and grants for FY25/26 were revised down to N$87.4 billion from N$89.4 billion in the October 2025 mid-year review.
Revenue as a share of GDP rises from 32.6% to 34.1%, partially supported by lower GDP.
Revenue is projected to increase from N$89.56 billion in FY26/27 to N$99.38 billion in FY2028/29, though the ratio to GDP declines to 31.3% and as low as 30.1% in FY2028/29.
Lower Southern African Customs Union receipts and persistent declines in diamond receipts are expected to weigh on revenue although, partly offset by gold receipts.
Our view is that revenue risks remain relatively balanced. Stronger uranium receipts could help offset downside pressures; however, subdued GDP growth may constrain tax revenue, particularly in the absence of a new growth catalyst such as a final investment decision (FID) in oil and gas to stimulate economic activity and spending.
We anticipate a potential FID on oil and gas developments around June 2026, which could meaningfully shift the outlook.
Such a development would likely support higher capital inflows, boost domestic spending, and strengthen tax collections.
More importantly, it could serve as a broader confidence catalyst, crowding in additional and more diversified foreign direct investment, thereby creating upside risk to current GDP projections.
EXPENDITURE
Expenditure is estimated at N$91.57 billion in FY2025/26 (from N$91.7 billion in the October 2025 mid-year budget review), and is expected to decrease to N$89.82 billion in the FY2026/27.
Operational spending estimates for the current fiscal year remain at N$80.63 billion in the FY2026/27 (unchanged from expectations in October 2025), while the development budget declines from N$11.11 billion to N$10.97 billion during the same period, reflecting a reduction in externally funded projects.
Domestic interest payments increase by N$200 million to N$11.87 billion, while foreign interest payments decline, aligned with the ministry’s domestic financing strategy and the rollover of two thirds of the Eurobond locally in the FY2025/26.
As such, estimates of total expenditure, including statutory commitments, are expected to decline marginally from N$106.10 billion to N$105.92 billion in the current budget, compared to the mid-year budget review in October 2025.
Going forward, total expenditure continues to exceed revenue, though this gap narrows over the MTEF.
Over the MTEF, expenditure dips to N$106.34 billion in the FY2026/27, before rising to N$110.42 billion in the FY2028/29.
Operational spending increases to N$81.34 billion in the FY2026/27, in line with the ministry’s intention of additional personnel in health and defence and N$259 million for higher salaries of political office-bearers.
Of some concern is the decrease in the development budget which declines to N$8.47 billion in the FY2026/27 and edges to N$8.502 billion in the FY2028/29.
State-funded projects fall by N$2.23 billion to N$6.58 billion in the FY2026/27 before recovering to N$7.74 billion in FY2028/29.
Externally funded projects decline sharply from N$2.59 billion in the FY2026/27 to N$859 million in the FY2028/29 (below the recent low of N$1.291 billion in the FY2023/24) due to reduced grants and loans.
This implies that over the MTEF, the government will plan to spend less than in the FY2023/24 on development.
Although this may be a way for the ministry to manage expectations given the low execution rate of the development budget (only 71% of the FY2025/26 budget was executed at the end of January 2026), this does pose a concern given the high capital expenditure required to enable the sixth National Development Plan.
On the other hand, this leaves room for the private sector to fill that gap in funding required to meet developmental needs.
– Helena Mboti is an economist at Standard Bank Namibia.
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