Source: Reuters

Namibia has raised its economic growth forecasts for 2023 and 2024 and lowered a budget deficit projection due mainly to strong growth in the oil and mining sectors, its finance minister said on Wednesday.

The southern African country expects to see economic growth of 5.6% for last year and 4.0% this year, up from projections of 3.5% and 2.9%, respectively, made in October.

Growth is then expected to fall to 3.9% in 2025, said Ipumbu Shiimi in a budget speech.

The budget deficit for the 2023/24 fiscal year is seen at 3.2% of gross domestic product (GDP), down from an October estimate of 4.2%, and should stay at 3.2% of GDP in 2024/25.

“The strong growth is anchored by upbeat activities in the natural resources sector, including the residual impact of ongoing petroleum exploration on domestic economic activities and the surge in uranium production following price increases,” Shiimi said.

Namibia produces no oil but has attracted huge interest from energy companies after discoveries by TotalEnergies TTEF.PA and Shell SHEL.L.

However, Shiimi said the projected pickup in growth would not address abiding issues such as high unemployment, poverty and income inequality, and that diversifying the economy remained an urgent policy priority.

Namibia has a $750 million Eurobond maturing in October 2025 that will be the largest single debt maturity in its history. The government plans to retire $500 million at maturity and refinance the remaining $250 million in the next financial year, Shiimi said.

He proposed corporate tax reforms to increase competitiveness, and a tax cut for low-income households to provide relief.

“The 2024/25 budget was crafted against the backdrop of much more stable macroeconomic fundamentals than we have seen in a long time,” said Shiimi, adding that this allowed room to channel some money to social sectors while increasing investments in infrastructure.

Cobus Theyse
Author: Cobus Theyse

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