Staff Reporter
FINANCE Minister Ericah Shafudah is set to table Namibia’s 2026–2027 National Budget in Parliament today, outlining government spending priorities amid mounting fiscal pressures. Recent analysis by Simonis Storm Securities highlights structural challenges in revenue collection, expenditure rigidity, and rising public debt that will shape the upcoming budget.
According to the Simonis Storm Research Team of Simonis Storm Securities (Pty) Limited, Namibia’s fiscal position in FY2025/26 shows both revenue and debt sustainability under strain. Government revised its revenue forecast downward from N$92.6 billion to N$89.4 billion, with mid-year collections reaching only 41% of the revised estimate—well below historical norms. Weakness is broad-based, affecting VAT, personal income tax, SACU transfers, and diamond revenues, suggesting structural rather than cyclical challenges. Namibia’s tax-to-GDP ratio remains high at around 33%, underscoring that the country’s fiscal constraints are largely linked to expenditure rigidity rather than revenue capacity.
On the spending side, the Medium-Term Expenditure Framework (MTEF) is broadly flat in nominal terms, implying real-term compression once inflation is considered. Fixed costs—including wages, statutory transfers, subsidies, guarantees, and debt service—consume about 60% of total expenditure. Debt service alone is projected at N$14.4 billion, limiting discretionary spending on development projects. As a result, the FY25/26 deficit is expected to widen to roughly 6% of GDP, while total public debt could rise to N$177 billion, or about 60% of GDP.
Looking ahead to FY2026/27, fiscal stability will depend on revenue growth, expenditure discipline, and economic performance. Without recovery in domestic demand, SACU inflows, or diamond production, deficits may remain high and the debt ratio could drift toward 65–70% over the medium term. Structural growth opportunities, including mining expansion, logistics corridor development, and potential oil and gas investments, are unlikely to provide meaningful fiscal relief until the latter part of the decade.
Photos: Parliament of the Republic of Namibia/Ministry of Finance-Namibia
