The African Development Bank (AfDB) has approved a R3-billion loan to finance the Namibia Economic Governance and Competitiveness Support Programme (EGCSP), which will support the strengthening of public financial management and improve the quality and efficiency of public sector spending.
“The EGCSP is designed to address emerging vulnerabilities undermining macroeconomic stability and support the government’s ongoing bold structural reforms aimed at driving long-term job creating growth and reducing income equality,” said AfDB senior VP Charles Boamah.
Namibia has registered one of the highest average growth rates in Africa over the past 20 years and has made good progress in reducing poverty.
However, more progress is needed to further reduce unemployment and income inequality. These challenges are compounded by bottlenecks in public financial management (PFM) and the business environment, which limit the pace of industrialisation and economic diversification.
In 2016, Namibia recorded a sharp slowdown in real gross domestic product (GDP) growth, from 5.3% in 2015, to 0.2%. As a share of GDP, the fiscal deficit was at 8.3% and the current account deficit at 13.7%, and public sector debt at 39.8% had also markedly increased, while international reserves at 2.8 months of imports were below the international benchmark of three months.
Guided by Vision 2030, the National Development Plan, the Harambee Prosperity Plan and other sector policies and strategies, the government has embarked on fiscal consolidation and wide-ranging PFM and business environment reforms to address these challenges, which is said to be beginning to yield positive results.
The AfDB, in collaboration with other development partners, will continue to support the government’s bold steps geared towards addressing the country’s short, medium and long-term development challenges.
The approval of the EGCSP is a major step in this direction.