Business Reporter
The Bank of Namibia declared dividends of N$278.2 million to the State Revenue Fund, for the 2020 financial year.
In the bank’s annual report, the central bank’s governor, Johannes !Gawaxab stated that the financial performance of the Bank in 2020 was negatively impacted by low interest rates in the global markets as a result of the COVID-19 pandemic.
!Gawaxab added nonetheless that the Bank still recorded a notable surplus of N$532.4 million, albeit lower than the previous year.
He stated that this enabled the Bank to declare a dividend of N$278.2 million to the Government, lower than the N$399 million declared a year earlier.
On the fiscal front, !Gawaxab noted that the overall deficit is estimated to have widened during FY2020/21 as a result of the government’s response to softening the impact of the pandemic on economic activity and a decline in tax revenue. The 2020/21 Central Government deficit as a percentage of GDP was estimated at 9.5 percent of GDP for the FY2020/21.
When compared to the previous fiscal year, the deficit-to-GDP ratio rose significantly making it the highest deficit ever registered in Namibia. This was attributed to the government’s efforts to reduce the impact of COVID-19 on economic activity and the negative impact of the pandemic on tax revenue. Total Government debt as a percentage of GDP increased to 60.0 percent at the end of December 2020.
The finance minister in his budget noted that as a result of increased financing requirements, public debt would rise to about N$140.8 billion or 76.2% of GDP in 2021/22 and would remain elevated over the MTEF. Debt is projected to stabilize at about 84.6 percent in 2025/26.
To remedy this deficit, the government has looked for outside sources of funding, which include an African Development Bank (AfDB) of N$1.5 billion which was approved on 17 March 2021 to finance the Namibia Governance and Economic Recovery Support Programme (GERSP).
The International Monetary Fund (IMF) on 1 April 2021 also approved Namibia’s US$270,8 million (N$4 billion) loan.
