Namibia Central Bank Warns Public Debt May Reach 70% of GDP

Namibia's public debt could rise to 70% of GDP by the end of the current financial year if the government does not implement spending reforms, according to the central bank. Officials said reducing expenditure alone would not solve the problem. They stated the government must also invest in projects that create jobs, improve service delivery, and encourage private sector investment.

Officials announced the introduction of outcome-based budgeting at eight ministries starting in the second quarter of this year. The pilot programme will cover the ministries responsible for education, health, home affairs, agriculture, finance, industrialisation, environment, and works and transport.

The approach aims to measure government performance based on results rather than spending levels. "For too long, public sector performance has been measured by what we spend rather than what we achieve," an official said.

Officials warned ministries against moving money allocated for development projects to cover day-to-day operational costs. "To ensure impactful fixed capital formation, I want to be unambiguous on one point: The virement of resources from development budgets to fund recurrent operational expenditure, as previously communicated, must be brought to an end," the official said.

Funds allocated to infrastructure, schools, roads, water projects and digital systems must remain dedicated to those projects.

Officials called for reforms in procurement systems, public enterprises, public service operations and digital government services. "No government can spend its way to prosperity. Sustainable development requires a thriving private sector, domestic investment, and foreign capital attracted by a predictable regulatory environment," the official said.