Windhoek: While the nominal growth of Namibia’s public debt has stabilised, its ratio to Gross Domestic Product (GDP) has deteriorated due to lower nominal GDP outcomes, raising concerns. This was according to the Minister of Finance, Ericah Shafudah, while tabling the 2025/26 national budget on Thursday.
According to Namibia Press Agency, Shafudah emphasised the importance of maintaining a primary budget surplus over the upcoming Medium-Term Expenditure Framework (MTEF) to manage the pace of debt accumulation. For the 2024/25 financial year, the budget deficit is projected at 3.9 per cent of GDP, slightly higher than the initial estimates of 3.2 per cent at mid-term. This increase, Shafudah noted, is due to lower nominal GDP figures and revenue reprioritisation.
The minister reiterated the government’s commitment to stabilising public debt and ensuring long-term fiscal sustainability, despite economic challenges. The aim is to maintain a sustainable budget deficit over the MTEF, targeting an average of 4.0 per cent of GDP. Namibia’s total revenue for FY2025/26 is estimated at N.dollars 92.6 billion, marking a 1.9 per cent increase from the previous year. Revenue constraints have largely been due to a N.dollars 6.9 billion decline in Southern African Customs Union receipts, subdued activities in the diamond sector, and overall economic headwinds. Despite these challenges, domestic revenue sources, including VAT and income tax, are expected to improve.
Shafudah announced a total budget of N.dollars 106.3 billion for FY2025/26, comprising N.dollars 79.8 billion for operational expenditure, N.dollars 12.8 billion for development expenditure, and N.dollars 13.7 billion for interest payments on debt. The development budget has increased by 22.6 per cent to N.dollars 12.8 billion to address infrastructure constraints and economic bottlenecks. However, the Minister raised concerns over debt servicing costs, which remain high at N.dollars 13.7 billion, equivalent to 14.8 per cent of revenue. She stressed the need to allocate resources efficiently to curb rising debt servicing costs while ensuring debt is raised in a cost-effective manner.