Niël Terblanché
A LOAN to Namibia of N$3.9 billion from the International Monetary Fund (IMF) will be used to pay for COVID-19 vaccines as well as to address the urgent fiscal and financial needs to revive the country’s economy.
The Ministry of Finance in a statement said that the Namibian Government applied for the loan from the Rapid Financing Instrument (RFI) that was made available by the IMF to middle-income countries last year. The RFI provides rapid financial assistance to all IMF member countries facing financial headwinds and Balance of Payment challenges.
According to the statement, the COVID-19 pandemic and its fallout have created a situation where Namibia’s fiscal deficit is widening substantially, at the same time that the country’s revenue from exports of goods and services are contracting with consequent potential pressure on the external accounts.
Last year, the Namibian economy fell by 7.2% due to the disruption of mining exports and tourism, which have slowed down the country’s tax revenues, as well as investment inflows.
The funds obtained from the IMF will provide much-needed financing to respond to the COVID-19 health emergency, including the purchase of vaccines and deployment of a vaccination campaign, needed to mitigate the severe socio-economic impact of the pandemic.
Key elements of the planned mitigation include stepping-up emergency health, and education spending, strengthening social safety nets to protect the most vulnerable from the impact of the crisis, and supporting the private sector, and protecting jobs.
The implementation of public finance governance mechanisms will ensure the appropriate use and monitoring of resources to address the COVID-19 crisis.
It should be noted that this is not a normal IMF loan that comes with strict and prescriptive conditions. This is the first time that Namibia is taking a loan from this institution,” the statement reads.
According to the finance ministry, the repayment period of the loan will be five years at an interest rate of 1.1%.
So far 85 countries in the world have benefitted from IMF financial relief for COVID-19.
