Government worked hard to stabilise economy: Shiimi

15 Jun 2017 16:10pm
By Maggy Thomas
WINDHOEK, 15 JUN (NAMPA) – Namibia has done its best to stabilise the domestic economy and reduce Government spending following a downgrade to a negative outlook by the Fitch Rating agency last year.
The downgrade was due to various reasons, including rising Government debt and liquidity stress induced by the reliance on export of unprocessed natural resources for revenue.
In an interview with Nampa on Wednesday before the Fitch agency was to meet on Thursday, Bank of Namibia (BoN) Governor Ipumbu Shiimi said it is hard to predict the outcome of that meeting.
However, the State has done its best to address the credit concerns raised last year.
Shiimi said Minister of Finance Calle Schlettwein worked hard to reduce Government spending.
Last year, Schlettwein said Government managed to reduce expenditure by N.dollars 4.5 billion and allocated N.dollars 1 billion to priority projects to maintain growth in the economy and compensate for loss in income.
“Fitch Rating agency is looking how in debt this country is. If our debt is going to increase more because we are spending more as a government, it is not going to auger well with us,” said Shiimi.
Information about Namibia’s debt as of this year was not immediately available, but Namibia’s public debt grew by N.dollars 50 billion from 2010 to 2016, sparking fears over the economy’s sustainability.
Shiimi said as of 01 June, the preliminary stock of Namibia’s international reserves stood at N.dollars 24,2 billion, representing an increase on a monthly and annual basis.
The increase was attributed largely to local institutional investors, such as pension funds and long-term insurance companies that decided to liquidate some of their foreign investments to invest in the domestic economy.
“At this level, the stock of international reserves is estimated to cover 3,7 months of imports of goods and services, and thereby remains sufficient to sustain the currency peg between the Namibian Dollar and South African Rand.”
Shiimi said Namibia’s import bill has also reduced over time, while more local institutions are investing in the domestic economy and Government expenditure has decreased; all positive developments Shiimi said Fitch is asked to take into account when rating the country for international investors.
“We are working very hard to try and stabilise our economy. The fact that our reserves have increased I think augers well with Namibia; that is one of the concerns they raised.”
Shiimi said the BoN expects the Namibian economy to grow better this year than last, not significantly, but they are working hard to ensure a solid foundation.
“Whether they are going to be convinced that we have worked hard enough, is hard to tell,” said the BoN head.