Namibia
2008 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Namibia

This 2008 Article IV Consultation discusses that real GDP growth in Namibia is expected to moderate to about 3 percent in 2008 from 4.1 percent in 2007, reflecting a downturn in the mining sector owing to the global economic slowdown. Executive Directors have commended the authorities’ sound macroeconomic management, which had contributed to solid growth and strong external and fiscal positions. Directors have also encouraged the authorities to press ahead with their structural reform agenda so as to improve the country’s competitiveness, diversify the economy, and bolster growth prospects.

Abstract

This 2008 Article IV Consultation discusses that real GDP growth in Namibia is expected to moderate to about 3 percent in 2008 from 4.1 percent in 2007, reflecting a downturn in the mining sector owing to the global economic slowdown. Executive Directors have commended the authorities’ sound macroeconomic management, which had contributed to solid growth and strong external and fiscal positions. Directors have also encouraged the authorities to press ahead with their structural reform agenda so as to improve the country’s competitiveness, diversify the economy, and bolster growth prospects.

I. Background

1. Sound macroeconomic policies and high mineral prices have supported Namibia’s solid growth performance in recent years, broadly in line with the rest of the region. Terms of trade gains and higher Southern African Customs Union (SACU) transfers have also led to a substantial external account surplus and an improved fiscal position. However, the capital-intensive mineral sector and limited opportunity in the non mining sector have left unemployment high (over 30 percent), and income inequality among the highest in the world. A high, though declining, HIV/AIDS rate and low school enrollment continue to undermine productive capacity (Figure 1).

Figure 1.
Figure 1.

Namibia: Social Indicators

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

uA01fig01

SACU: Real GDP Growth

(Annual percentage change)

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

Sources: National authorities; and IMF staff estimates.

2. President Pohamba, who assumed office in 2005, is Namibia’s second president since independence in 1990. The ruling party, SWAPO, dominates politics and holds three-quarters of the seats in parliament. Elections are scheduled for November 2009.

II. Recent Economic Developments

3. Real GDP growth is expected to moderate to about 3 percent in 2008 from 4.1 percent in 2007, reflecting a downturn in the mineral sector and the lagged impact of monetary tightening in 2007 (Figure 2).1 Activity in the mineral sector slowed abruptly in late 2008: in November, the copper company suspended mining operations as prices fell sharply, while the main diamond company cut production following a significant drop in demand and large inventory accumulation.

Figure 2.
Figure 2.

Namibia: Recent Macroeconomic Performance

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

4. Large increases in international food and fuel prices pushed inflation into double digits in 2008. The 12-month inflation rate rose sharply during the first half of the year and remained at 10.9 percent in December, compared with 7 percent a year before (Figure 2). Although world fuel prices fell significantly in late 2008, this was partly offset by the sharp depreciation of the Namibian dollar, limiting the pass-through to domestic prices. As a major trading partner with a one-to-one currency peg to the South African rand, domestic prices in Namibia continue to closely follow inflation in South Africa.

5. The 2007/08 (April–March) fiscal surplus, including extrabudgetary expenditure, was 4.5 percent of GDP, compared with the budgeted 0.2 percent. Stronger revenue performance was driven by a significant improvement in tax administration, increased mineral export taxes due to high commodity prices, and strong SACU receipts. The large fiscal surplus was also partly due to lower than budgeted capital expenditure.

6. The 2008/09 budget envisages a sharp swing in the fiscal balance to a deficit, with an unprecedented increase in expenditure (Figure 3). The fiscal balance is projected to shift to a deficit of 5.7 percent of GDP, a swing of over 10 percent of GDP from the 2007/08 outturn. Budgeted current and capital expenditures are considerably higher than the average for the past three years, with externally financed capital expenditure projected at 3.7 percent of GDP compared to 0.6 percent in 2007/08. While revenue performance in the first two quarters of 2008/09 remained strong, the impact of falling global demand could dampen it for the rest of the fiscal year. Should the budget be fully implemented, public debt would rise to 24.8 percent of GDP, close to the authorities’ target of 25 percent.

Figure 3.
Figure 3.

Namibia: Fiscal Developments

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

7. The current account surplus is projected to fall to 2 percent of GDP in 2008, reflecting declining terms of trade and substantial imports for mineral exploration and public infrastructure projects (Figure 4). The terms of trade decline mostly reflected the collapse in mineral export prices from historic peaks in recent years. Although capital outflows—mostly through pension funds—slowed, they remained large. Official international reserves increased to an equivalent of 3.7 months of imports of goods and services in December 2008, up from 3 months at end-2007. In line with the South African rand, the Namibian dollar depreciated by 26 percent against the U.S. dollar during 2008, roughly two-thirds of which took place during September–December.

Figure 4.
Figure 4.

Namibia: External Environment

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

8. The BoN reduced its repo rate by 50 basis points in December 2008 in response to slowing economic activity and moderating inflation, in line with the move by the SARB. This left the rate at 10 percent, still 150 basis points below the SARB repo rate, after the BoN opted not to follow three SARB rate increases in 2007–08 (Figure 5). The BoN also modified its operational framework in 2008, introducing a seven-day repo facility as the key monetary policy instrument and increasing issuance of BoN bills in order to manage liquidity and provide an alternative asset for banks to meet statutory asset requirements. Growth in credit to the private sector slowed drastically in 2008 as a result of monetary tightening in 2007,2 falling to 5.6 percent in November (year on year) from 13 percent in December 2007.

Figure 5.
Figure 5.

Namibia: Financial Sector Developments

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

III. Policy Discussions

A. Global Outlook and Risks

9. Namibia’s real GDP growth is projected to slow to 1 percent in 2009, despite the large fiscal expansion, as external demand weakens further. Mining output is expected to fall significantly, and after slowing dramatically in late 2008, investment in mineral exploration is likely to remain weak. The marked tightening in international financial markets could also jeopardize several investment projects expected to be the main drivers of medium-term growth, including investments in electricity generation and water desalination. The authorities agreed that output growth was likely to slow in 2009, but projected real GDP growth of roughly 2 percent during the November 2008 mission, when the global environment was still more benign.

10. There is potential for a more significant slowdown in 2009 if a protracted global downturn results in an even sharper decline in mining output. Preliminary reports indicate that the diamond industry is considering a reduction in output of as much as 40 percent relative to initial plans for 2009 in response to concerns that demand will weaken further. In addition, a more significant slowdown in South Africa than currently envisaged could further reduce the SACU revenue pool. As an illustrative scenario, if both of those risks should materialize, real GDP is projected to decline by roughly 0.5 percent, compared with an increase of 1 percent projected in the baseline. In addition, the current account would shift to a deficit of 2 percent of GDP compared to a projected surplus of 0.8 percent, while the 2009/10 fiscal deficit would widen from the projected 2.3 percent of GDP to nearly 5 percent.

11. Further depreciation of the Namibian dollar could put upward pressure on inflation through increased import prices. While the decline in international food and fuel prices should help moderate inflation in 2009, the rapid depreciation raises the risk of a substantial increase in imported inflation that could constrain the scope for monetary easing within the CMA.

B. Maintaining Macroeconomic Stability

Fiscal policy

12. The authorities considered the planned fiscal expansion in 2008/09 an appropriate countercyclical response to the economic downturn that would support growth and address infrastructure deficiencies. The authorities were optimistic that the budget would be fully executed, including the planned 7 percent of GDP increase in spending, and that implementation capacity would not pose a significant constraint, given the high import content of expenditure. Moreover, the budget implies that public debt would remain within the 25 percent of GDP target, limiting the risks to macroeconomic stability.

13. Staff agreed that an expansionary fiscal stance was appropriate given the economic slowdown, but cautioned that the magnitude of the planned increase appears large and expressed concern about compromising the quality of spending. Taking into consideration the import content of expenditure, the historical implementation rate, and the expected impact of the slowdown on mining sector revenue, staff estimated that a deficit of 2.6 percent of GDP for 2008/09 would be a more likely outcome. Staff also considered a deficit in this range to be a more appropriate fiscal target to safeguard macroeconomic stability, while still entailing a strong discretionary fiscal impulse.

14. The authorities indicated that the increase in spending in the 2008/09 budget would be largely one-off, with a decline planned for 2009/10–2010/11, as described in their Medium-term Expenditure Framework (MTEF; 2008/09–2010/11). They explained that spending will remain higher than the recent trend in order to address infrastructure bottlenecks and reduce poverty, but that the fiscal deficit will be less than during 2008/09. Staff supported the less expansionary fiscal stance planned for 2009/10. However, a staff projection based on the authorities’ MTEF indicates that authorities’ target of a 25 percent public debt-to-GDP ratio would be breeched by 2011/12.

Namibia: Staff Baseline Medium Term Fiscal Outlook

(In percent of GDP)

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Sources: Namibian authorities; and IMF staff estimates and projections.

“Overall balance” reflects externally financed project spending (except for roads) that is not channeled through the state account. “Overall balance excluding extrabudgetary spending” excludes such spending and thus corresponds directly with the authorities’ budget balance.

The change in domestic debt includes bonds issued for local capital market development.

15. The authorities shared staff’s concern about the risks to medium-term fiscal sustainability in the event of a prolonged economic downturn. Customs and mineral-related taxes, currently accounting for just under half of total receipts, will be impacted directly by slower growth in South Africa and a decline in mineral exports that could continue through mid-2010. SACU revenue is expected to fall by about 2 percent of GDP during 2008/09–2010/11, with further declines likely in the medium term, given the planned transformation of Southern African Development Community (SADC) into a customs union and the planned Economic Partnership Agreement between countries in the region and the EU. The authorities’ medium-term fiscal projection does not appear to have taken these risks sufficiently into consideration. The deficit in the overall balance excluding SACU and mineral revenue is projected to increase from 10.6 percent of GDP in 2007/08 to 19.6 percent in 2008/09, despite a healthy surplus in 2007/08.

uA01fig02

Namibia: Fiscal Balance, with and without SACU and Mineral

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

Sources: Namibian authorities, and Fund staff estimates and projections.

16. Staff agreed that a public debt target of 25 percent of GDP continues to provide an appropriate fiscal policy anchor, but recommended that the definition of public debt be expanded to include publicly guaranteed debt and be adjusted for government deposits. The anchor is consistent with research indicating that on average the sustainable level of public debt for emerging market economies is about 25 percent of GDP and does not breech the threshold for debt intolerance derived in a recent staff study.3 Given the volatility of cyclical revenue booms and a significant increase in publicly guaranteed debt, staff considered that a broader definition of ‘net public and publicly guaranteed debt’4 would better anchor the fiscal stance and safeguard against surprise calls of publicly guaranteed debt. The authorities generally agreed, with the inclusion of government deposits in the coverage addressing their concern about a possible lack of fiscal space under the new definition. However, they could not commit to a timeframe for implementation.

Namibia: Staff Alternative Medium Term Fiscal Outlook

(In percent of GDP)

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Sources: Namibia authorities; and Fund staff estimates.

“Overall balance” reflects externally financed project spending (except for roads) that is not channeled through the state account. “Overall balance excluding extrabudgetary spending” excludes such spending and thus corresponds directly with the authorities’ budget balance.

The change in domestic debt includes bonds issued for local capital market development.

17. Staff’s alternative scenario achieves a reduction of net public and publicly guaranteed debt to the 25 percent of GDP target through two main modifications. First, the scenario assumes that the planned reforms of state-owned enterprises (SOEs) will result in a gradual decline in their need for budgetary support and debt guarantees starting in 2010/11. The anticipated reforms of SOEs include improvements in operational efficiency and in financial management by tightening the criteria on publicly guaranteed debt of SOEs, consistent with the public and publicly guaranteed debt target. Second, the scenario adjusts the planned level of capital expenditure to reflect historical implementation rates. Estimates of public debt sustainability confirm that the level of public debt is largely sustainable.5 The simulations were sensitive, however, to declining SACU revenue, increases in publicly guaranteed debt, and a moderation of recent high GDP growth rates.

18. The authorities have made considerable progress in reforming public financial management. Revenue administration was strengthened through the introduction of comprehensive auditing of value added tax (VAT) refunds, and there are plans to expand the mineral tax to all minerals. The use of the Integrated Financial Management System has improved utilization of resources and prevented diversion of funds, while the first Annual Accountability Report on budget implementation prepared for 2006/07 will further strengthen budget execution and make the budgetary process more transparent. The authorities are also working to improve program budgeting and revenue forecasting, which is crucial for efficient fiscal management.

19. Staff recommended consolidating extrabudgetary project expenditure into regular budget reporting in order to provide more comprehensive coverage. This would not only enhance transparency, but also allow for a more comprehensive assessment of the overall fiscal balance and the macroeconomic impact of fiscal policy.

20. The authorities are moving forward with fiscal decentralization and exploring how best to effectively use public-private partnerships (PPP). Staff commended recent progress on decentralization, but suggested a more comprehensive approach to fiscal relations between the central and lower tiers of government, with clear guidelines on revenue and expenditure assignments, transfers and subsidies, and financing and borrowing.6 The authorities agreed with this recommendation, and noted that they were formulating a formula-based intergovernmental fiscal allocation mechanism with minimum standards for fiscal accountability. The authorities also agreed on the importance of establishing a clear legal and institutional framework for implementing PPP projects, clearly identifying and disclosing the fiscal risks associated with such projects.

Pursuing external stability

21. The authorities stressed that the peg of the Namibian dollar to the rand has underpinned Namibia’s deep economic and financial ties with South Africa. Although the significant recent depreciation and prolonged current account surplus may suggest a possible undervaluation, staff’s assessment suggests that the real effective exchange rate (REER) is not significantly different from the equilibrium level and is broadly consistent with external stability (Box 1). The REER depreciated by 9 percent in real terms from the end of 2007 through November 2008, but this follows an appreciation of more than 30 percent from 2001–07. In addition, the large current account surplus of 2006–07 appears to reflect a temporary boom in SACU receipts and export prices, while exports of nonrenewable mineral resources are expected to decline as these resources are depleted over the medium term.

Namibia: Tradeable Sector Performance, 2004–08

(Percentage changes one year earlier; unless otherwise noted)

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Sources: Namibian authorities; and IMF staff estimates.

An Assessment of External Stability

The equilibrium real exchange rate approach suggests that Namibia’s REER may be undervalued. An econometric analysis of behavioral determinants of the equilibrium REER1—trade openness, investment rate, broad money, and relative productivity against main trading partners—indicates that Namibia’s REER is undervalued. However, these estimates are highly volatile, depending on the assumption about the smoothing factor for the fundamentals, an important consideration for a commodity exporting country like Namibia. The magnitude of the undervaluation ranges from 13 to 20 percent, depending on the period considered.

uA01bxfig01

Equilibrium Real Effective Exchange Rate Model, 1980–2008

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

Source: IMF staff estimates.

However, the macroeconomic balance approach finds the current REER to be overvalued. The underlying current account deficit is estimated to about 4.5 percent of GDP, while the current account norm stands at 4 percent. This results in an overvaluation of 11 percent assuming that current account elasticity with respect to the REER is about 0.8.

Overall, these results do not provide conclusive evidence that the REER was not aligned with its equilibrium value at the end of 2008 and the findings do not indicate substantial risks to external stability.

1The model, documented in “What Do We Know About Namibia’s Competitiveness?” WP/07/191, is based on data for 1980–2007.

22. Improving competitiveness is essential to stimulate Namibia’s growth and reduce high unemployment. The country’s main strengths remain its strong institutions and good infrastructure. However, labor skill shortages and complicated business registration and licensing procedures continue to undermine firms’ competitiveness. With the support of the World Bank and the EU, Namibia’s Strategic Plan for Education and Training Sector Improvement Program (2005–20) aims to make the education system more effective. To promote investment and trade, a “one stop-shop” has been established to facilitate fast-track processing of regulatory requirements.

uA01fig03

Cost of Doing Business

(Percent of countries scoring better than Namibia)

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

Source: World Bank’s Doing Business (2009).
uA01fig04

Global Competitiveness Index: Change in Rankings, 2007–09

(A positive value corresponds to an improvement in the ranking)

Citation: IMF Staff Country Reports 2009, 136; 10.5089/9781451828498.002.A001

Source: Global Competitiveness Report 2008–09.

Monetary policy and financial stability

Monetary policy

23. The BoN did not follow the SARB interest rate hikes from December 2007 through June 2008, considering that further monetary tightening was not necessary given moderating inflation. The authorities maintain that capital controls allow them to retain some scope for independent monetary policy within the CMA. The BoN requires that domestic assets of commercial banks be equal to or greater than their domestic liabilities, and limits their foreign assets to one-half their level of equity capital. While the exchange rate peg to the rand remains the monetary policy anchor, the BoN considers that these constraints on capital movement provide some discretion to deviate from the SARB repo rate without significantly affecting capital flows. Also, to ensure the stability of the fixed peg, the BoN maintains foreign exchange reserves well above the level necessary to cover currency in circulation and monthly average capital outflows.

24. Staff agreed that the current deviation from the SARB repo rate poses little risk at present, provided that the BoN maintains sufficient international reserves. Staff noted, however, that as a small, open economy with a fixed exchange rate as a member of CMA, Namibia has limited scope for an effective independent monetary policy. Although the current capital controls constrain banks to some extent, there remain a wide range of other possible channels for capital to move back and forth from South Africa, which keeps money market and deposit rates closely linked to rates in South Africa.

Financial stability

25. The global financial crisis has had little direct impact on the Namibian financial sector, which has benefited from continued prudent supervision by the BoN. Banks in Namibia appear to have been well-protected by conservative lending practices and little direct overseas exposure, and remain well-provisioned and profitable. The expected entrance of a fifth bank in 2009 is expected to increase competition within the sector. Nonperforming loans are at very low levels despite a modest increase in 2008, but can be expected to increase as the real economy continues to slow. Given that banks have relatively high concentration to real estate and consumer lending, the banking system may be exposed to higher risks.

26. The BoN has acted quickly to curb pyramid schemes. It closed down one such scheme in 2008, and has initiated a public awareness campaign to deter others. The authorities plan to increase consultation within the CMA on the issue, given similar problems elsewhere in the region and will participate in an IMF workshop on the issue in early 2009. The BoN has also continued to strengthen its stress-testing framework and will move forward with implementation of Basel II in 2009.

27. The capacity of the Namibia Financial Institutions Supervisory Authority (NAMFISA) is increasing, but the authorities recognize the need for further improvement. A new law to consolidate regulation of nonbank institutions and clearly define NAMFISA’s supervisory authority is expected to be approved by the end of 2009. NAMFISA has also introduced regular standardized reporting for pension funds and insurance companies that should help address deficiencies in data collection and monitoring and is implementing a risk-based auditing system.

28. The government is considering modifications to the tighter domestic investment requirements introduced for pension funds and life insurance companies in 2008 to address market uncertainty about their interpretation. The new regulation, which was to be phased-in over five years beginning in 2009, limits dual-listed companies (largely traded in South Africa) to a maximum of 10 percent of local assets and requires a minimum of 5 percent of total assets to be invested in unlisted Namibian companies. The previous regulation permitted investment in dual-listed companies to be counted toward the 35 percent domestic investment requirement, with no required minimum investment in unlisted companies.

29. The authorities consider the revision an important step to help channel high domestic savings to support economic growth. They indicated that the previous regulation was not working as envisaged, given that the domestic investment requirement was mostly met through investment in dual-listed companies that also trade in South Africa, and that they considered the revision a relatively modest change with a sufficient phase-in period. The authorities maintained that it would not create undue risk for these funds and cited the example of many other emerging market economies with similar requirements.

30. Staff encouraged the authorities to consider a more moderate change to the requirements on domestic investment. Staff agreed that a modest revision to direct a larger share of investment into local assets rather than dual-listed shares could be appropriate, but cautioned that there are insufficient instruments to absorb efficiently the significant volume of capital inflows that the new regulation would require. The limited number of domestically listed companies and corporate and government bonds are mostly held by buy-and-hold investors and do not trade in sufficient volume or size to absorb the capital inflow. In addition, staff noted the higher risk associated with the required allocation in unlisted companies and the implications for insurance reserves and pension savings. Experience with investment in unlisted domestic companies by the government pension fund in the mid-1990s raises significant concerns about excessive risk associated with these investments.

C. Poverty Reduction and Structural Reforms

31. The authorities have taken several measures to address poverty and alleviate the temporary impact of high food and fuel prices. These include a zero-rate value-added tax on selected food items, rebate facilities for food importers, and a food distribution program to feed the most vulnerable. The authorities restated their commitment to combating poverty and expanding the social safety net and noted that the 2008/09 budget increased payments to the elderly, orphans and vulnerable children, and war veterans’s allowances. The mission supported additional but targeted social safety support and recommended that any increase should be accommodated by reallocation of resources within the existing budget envelope.

32. The National Development Plan 3 (NDP3) (2007/08–2011/12) aims to achieve sustainable economic growth and reduce poverty. Under NDP3, the authorities plan to focus resources on the poorest and the most vulnerable, improve the social safety net to alleviate poverty and inequality, and foster competitiveness to promote growth and employment. Each ministry is required to develop a strategic plan consistent with the MTEF, with a firm focus on monitoring and evaluation of outputs.

33. Unemployment and HIV/AIDS remain the major challenges to overcoming poverty. The Labor Act of 2007, enacted in 2008, aims to provide greater protection to workers while acknowledging that the business sector needs flexibility and cost competitiveness in staffing. Under the National Strategic Plan on HIV/AIDS, Namibia has made good progress in expanding the availability of anti-retroviral treatment (ART), with about 80 percent of those in need currently receiving treatment. Progress on prevention remains a priority, however, and reliance on external funding could jeopardize the long-term provision of ART.

IV. Staff Appraisal

34. The macroeconomic outlook faces significant downside risks from the slowing global economy. Real GDP growth is projected to slow to 1 percent in 2009, with the potential for a much more significant slowdown if weakening global demand results in further cuts in mining activity. However, the decline in world food and fuel prices toward the end of 2008 should bring the inflation rate back down to single digits in 2009.

35. Although countercyclical fiscal policy is appropriate in the context of the economic slowdown, the budget for 2008/09 appears too expansionary. A less expansionary fiscal stance would allow for a more gradual increase in capital expenditure, while remaining within the target for the net public debt-to-GDP ratio over the medium term. In this regard, the more modest fiscal deficit projected for 2009/10 appears appropriate. SOE reform remains a priority to improve their operational efficiency and reduce the need for budgetary support for these enterprises.

36. The exchange rate peg to the rand remains a strong monetary policy anchor. The BoN has found some room to deviate from the interest rate policy of the SARB, although the peg and close financial links with South Africa are likely to constrain the scope for effective independent monetary policy over the longer-term. It will be important to maintain sufficient international reserves and monitor capital flows closely to allow timely adjustment of interest rates. At present, staff’s analysis does not indicate substantial risks to external stability and the real exchange rate appears broadly in line with equilibrium, with the estimates subject to considerable uncertainty.

37. The turbulence in international financial markets seems to have had little impact as yet on the banking sector. The banks are well-capitalized and very profitable, with a low level of non-performing loans, although the authorities will need to remain vigilant as the economic downturn advances in 2009, especially given a high concentration of real estate and consumer loans.

38. Consideration should be given to easing the new regulation on domestic investment requirements for pension fund and life insurance companies. The authorities’ plan to phase in the changes will help smooth the transition, but further flexibility to mitigate the risks to institutional investors would be desirable.

39. It is recommended that the next Article IV consultation take place on the standard 12-month cycle.

Table 1.

Namibia: Selected Financial and Economic Indicators, 2005–13

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Sources: Namibian authorities; and IMF staff estimates and projections.

Figures include public enterprise and central government investment.

Figures are for the fiscal year, which begins April 1.

Figures include government deposits.

Additional debt was issued in 2008 to build up the redemption account for the maturing bonds.

Figures of 2007 based on actual data through September 2007.

Public and private external debt.

Table 2.

Namibia: Balance of Payments, 2005–13

(In millions of U.S. dollars)

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Sources: Namibian authorities; and IMF staff estimates and projections.

Namibia will become a net exporter of electricity in 2012, when electricity production from the Kudu gas project is expected to be fully operational.

Southern African Customs Union.

Gross foreign assets of the Bank of Namibia, converted to U.S. dollars.

International investment position.

Table 3a.

Namibia: Central Government Operations, 2006/07–2013/14

(In millions of Namibian dollars)

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Sources: Namibian authorities; and IMF staff estimates and projections.

“Overall balance” reflects externally financed project spending (except for roads) that is not channeled through the state account. “Overall balance excluding extrabudgetary spending” excludes such spending and thus corresponds directly with the authorities’ concept.

The change in domestic debt includes bonds issued for local capital market development.

Table 3b.

Namibia: Central Government Operations, 2006/07–2013/14

(In percent of GDP)

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Sources: Namibian authorities; and IMF staff estimates and projections.

“Overall balance” reflects externally financed project spending (except for roads) that is not channeled through the state account. “Overall balance excluding extrabudgetary spending” excludes such spending and thus corresponds directly with the authorities’ concept.

The change in domestic debt includes bonds issued for local capital market development.