DESPITE all the cutbacks ushered in by the Namibian government in 2016 to slow down the growth in debt levels, which it is estimated will reach N$97 billion by the end of the 2020 financial year, central government’s debt stock continues to rise.
This is according to the Bank of Namibia (BoN), which released its 2nd quarterly bulletin for the financial year today.
Deputy Director of Corporate Communications at BoN, Kazembire Zemburuka stated that central government’s total debt as a percentage of GDP stood at 43.6% at the end of the first quarter of fiscal year, which represents an increase of 3.2%.
He further noted that Namibia recorded a larger current account deficit during the second quarter of 2019.
“The deficit on the current account worsened to N$3.1 billion, compared to a deficit of N$1.3 billion in the second quarter of 2018. The main drivers of the widening current account deficit were the substantial deterioration in the merchandise trade deficit as a result of a growing import bill, coupled with increased net outflows on the services account,” Zemburuka explained.
He further stated that the stock of foreign reserves held by BoN increased, supported by higher SACU receipts, coupled with lower foreign Government payments.
This resulted in an import cover of 4.5 months at the end of the second quarter of 2019.
Namibia’s International Investment Position recorded a net liability of N$2.7 billion at the end of the second quarter of 2019, lower than the position of N$10.7 billion in the corresponding period of 2018.
Zemburuka also noted that the Namibia Dollar depreciated against all major trading currencies due to the downside risks that emanated from the trade tensions between the US and China, coupled with South Africa’s weak economic growth.
Giving an overview on the performance of different sectors in the sectors, Zemburuka stated that activity in the domestic economy slowed during the second quarter of 2019, while inflation rose over the same period.
“The weak performance in the domestic economy was reflected in the mining sector, due to a decline in the production of both diamonds and uranium. Similarly, slower activity has been observed in the wholesale and retail trade and tourism sectors,” he explained, adding “Activity in the transport and communication sector also slowed as reflected in decreased value addition in the communication subsector. The construction sector recorded weak activity as a result of reduced private sector construction works.”
With regard to agricultural sector, Zemburuka stated that available livestock (one of the indicators for developments in the agriculture sector) has been reduced due to high drought-induced sales, leading to limited restocking activity.