Namibia-Economy

Namibia in more borrowing to plug budget deficit

APA-Windhoek (Namibia)

Namibia’s Finance minister Calle Schlettwein said on Wednesday that the government will be forced to borrow more money to finance its budget deficit.

The 2019/20 budget deficit is estimated at N$8.2 billion (US$569 million) or 4.1 percent of GDP and expected to average 3.4 percent over the next three years.

The budget deficit for 2018/19 stood at 4.4 percent.

“Faster reduction in the budget deficit would require deep expenditure cuts that would hurt growth and service delivery. The deficit will be financed through a combination of domestic, multilateral and bilateral borrowing,” the minister said, while presenting the 2019/20 national budget in parliament.

Meanwhile, the minister further revealed that the government debt stood at about N$87,5 billion (US$6.07 billion) by the end of the 2018/19 financial year.

That amounts to 46,3 percent of GDP, while debt interest payments amount to about 10 percent of government revenue.

For the 2019/20 financial year, total revenue is estimated at N$58.4 billion (US$4.05 billion), 3 percent better than the estimated outturn for 2018/19 that was projected at N$56.7 billion (US$3.93 billion) and 29.7 percent of GDP.

The minister also expressed anxiety over high debt, saying it will not allow for further aggressive debt financing, that it is not a sustainable option.

“Equally, significant increases in domestic revenue through higher and additional taxes will do more harm than good to the economy. Therefore, we are restricted in our ability to increase expenditure,” the minister said.

Meanwhile, the Namibian government will set aside funds in the sinking fund to refinance maturing debt, said Schlettwein.

Sinking fund investments are made for debt redemption for which 70 percent is reserved for redeeming maturing debt. The sinking fund will be further build up quarterly,” he said.


AT/as/APA

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