THE economy is faced with a multitude of challenges, which includes the high pandemic-related debt accrued by the government and the ever-rising interest rates.
This was recently highlighted by the Prime Minister, Saara Kuugongelwa-Amadhila, at the African Central Bank Conference in Johannesburg, where she explained that the country’s debt remains elevated above thresholds and sustainable levels. Namibia’s public debt ballooned to over N$135.7 billion in September 2022.
“The pandemic-related borrowings drove government debt to unprecedented levels just as global interest rates rose to fight inflation. High debt and rising rates restricted economic policy in developing economies and drove low-income countries into default with no clear safety net,” she explained.
The prime minister added that risks to the economy are predominately in the form of global monetary policy tightening and the high cost of key import items. The latter, she said, are expected to keep inflation pressures elevated, especially those that affect the core inflation such as fuel and food items.
Kuugongelwa-Amadhila explained that the global rise in inflation has resulted in exchange rate volatility and tighter financial conditions. She pointed out that financial conditions have continued to tighten significantly as the central banks aggressively hiked interest rates to reign in and anchor inflation.
While necessary, she explained, this has impacted economic growth and slowed post-covid-19 recovery efforts. She added that the spill-over effects from the Covid-19 pandemic and the ongoing conflicts in Europe have also resulted in sharp food prices globally.
“In addition to their growth impact, these policy actions have affected vulnerable members of society across the globe, especially in low- and middle-income countries,” the prime minster added.