A mission from the International Monetary Fund (IMF) concluded its annual visit to Namibia with a statement on November 7, emphasising the “consistently high quality” of policy discussions with local authorities. The Fund expects economic growth to moderate to 4% this year (identical to our projection) as a result of weak demand for exports and the country’s drought conditions. However, this will be more than offset by strong domestic demand on the back of tax relief announced in the 2013/14 fiscal budget, strong retail sales, and a healthy construction sector.
The IMF commented on the better-than-expected out turn to the 2012/13 fiscal budget which ended with a smaller deficit than the multilateral organisation projected. Still, the Fund again urged Windhoek to pursue “growth friendly” fiscal consolidation over the medium term and that this should include reining in current spending while also preserving growth-promoting capital and infrastructure spending. The mission also welcomed a government review that aims to improve the business and investment climate.
Why do we care? The IMF was quite flattering in its statement on Namibia, though full documentation on the Article IV visit will no doubt contain more detail on issues that need to be addressed by the state. Still, the positive evaluation of the desert economy’s fundamentals underscores the sovereign’s investment-grade rating – and there are only a handful of these appraisals on the continent. As stated in our most recent review of Namibia, the country’s economic dynamics are on a better footing than a few years ago, while the political situation remains stable and of minimal concern.
Analyst: Christie Viljoen