Namibia’s public debt – as a percentage of its gross domestic product (GDP) – is projected to reach a staggering 75% before it gradually starts to show a decline over the course of the medium-term expenditure framework (MTEF).

This according to estimates provided following the tabling of the budget by finance minister Iipumbu Shiimi yesterday.

This means national debt is expected to reach its highest level ever, topping roughly N$150 billion, relative to GDP.

“The public debt stock is estimated to increase to N$150.9 billion or 70.1% of GDP before peaking in the coming financial year,” Shiimi said of Namibia’s dire finances.

Budget estimates show that debt levels should start showing a decline, reducing to 69.8% of GDP in 2025 and 66.2% in 2026. The reduction in Namibia’s debt stock was as a result of the settlement of Air Namibia’s A330 leases, a note in the MTEF stated.

The reduction was also expected to be further bolstered by the repayment of its second Eurobond, which is only due in 2026.

Despite an expectation of lower debt in the coming years, government’s ability to finance its dues still remains a concern, Shiimi noted.

“Interest payments amount to N$10.2 billion, equivalent to 13.4% of revenues and 4.7% of GDP. There are moderate signs of stabilisation in the debt-servicing metrics, although still above the desired benchmark of 10% of revenues. Further efforts are still required over the MTEF to get on a debt-reduction path and entrench fiscal sustainability,” he added.

Even with slowing debt, government still needs to fork out N$9.1 billion to finance its shortfall to carry out its activities for the year and would finance it through the issuance of domestic debt, Shiimi said.

“The deficit of N$9.1 billion in 2023/24 will be financed through a combination domestic debt instruments and funding from multilateral organisations. As customary, the detailed borrowing plan will be disseminated to market participants before the commencement of the new financial year,” he said.

Tax interventions announced

The minister announced a reduction in the non-mining tax rate of two percentage points in a move to attract investment to Namibia. The reduction was expected to be completed over the course of the MTEF.

“Accordingly, the tax rate will be reduced to 31%, effective on 1 April 2024, with a further reduction to 30% on 1 April 2025,” he said.

Individuals earning under N$100 001 per annum would also enjoy the benefit of not paying tax on their salaries, although no date has been announced for its implementation.

“We have resolved to introduce tax relief for individuals in the N$50 000 to N$100 000 tax bracket, effectively reducing their tax rate to zero, effective in the 2024/25 financial year. The implementation modalities of the envisaged tax relief will be outlined in due course,” Shiimi said.

The Namibia Revenue Agency (NamRa) would continue with its tax-relief programme up until 30 October 2024, at which point it will be done away with.

As part of this programme, “interest and penalties will be fully written off if outstanding capital is fully settled by 30 October 2024,” he said.

“This is the final extension of this programme, and we urge all concerned taxpayers to participate before the due date. Afterwards, there will be no more mercy.”

Spending priorities for 2024

In anticipation of the census, which had been delayed twice due to lack of funds, government will set aside over N$700 million.

“A total of N$706 million has been allocated for the Namibia Statistics Agency [NSA] to conduct the long overdue national population and housing census. Accordingly, NSA will make the necessary announcements in respect of the timing of the census in due course,” Shiimi said.

Resources would also be prioritised for voter registration in the run-up to the 2024 presidential and national elections, he said.

“Provisions to the tune of more than N$295 million have been made to enable the Electoral Commission of Namibia to conduct the mandatory general registration of voters as well as voters’ education during the course of the 2023/24 financial year.”

Meanwhile, education will receive a big boost as government moves to deal with the lack of classrooms.

“In the education sector, we have increased the allocation to basic education to N$16.8 billion in 2023/24 financial year, and N$51.2 billion over the MTEF. Of these allocations, more than N$200 million is earmarked for the recruitment of additional teachers to ensure adequate teacher-learner ratios in classrooms,” Shiimi said.

The health ministry is expected to receive N$29 billion over the MTEF, he noted.

“The vote of health and social services will receive N$9.7 billion in the 2023/24 financial year and N$29.4 billion over the MTEF. Within that allocation, we have availed more than N$700 million to the ministry for investments in and renovations of health facilities as well as recruitment of medical personnel as well as acquisition of pharmaceuticals and ambulances,” he said.