NAMIBIA’S ECONOMY TO GROW AT ABOVE GLOBAL AVERAGE PACE, SAYS FINANCE MINISTER

WINDHOEK, Feb 20– Namibia’s economy is projected to grow at above the global average pace, albeit moderate in line with global trends, says Minister of Finance Saara Kuugongelwa-Amadhila.

Tabling the National Budget for the 2014/15 fiscal year in Parliament here Wednesday, she said Namibia’s gross domestic product (GDP) was projected to grow by 5.0 per cent in 2014 and remain relatively flat at 4.8 per cent over the Medium-Term Expenditure Framework (MTEF) covering the 2014-2017 period.

Kuugongelwa-Amadhila explained that stronger investment activity, the coming on-stream of some of the investment projects in the mining and manufacturing sectors, and the strengthening of demand conditions in key trade partners of Namibia will account for the improved pace of activity in 2014.

In particular, increased activity in the construction and manufacturing sub-sectors will anchor growth during the MTEF, while slow recuperation in mineral commodity prices and the devastating effects of the 2013 nationwide drought are expected to be a drag on the volatile primary sector.

She said that building on progress made in 2013, the recovery in the developed economies was expected to provide a basis for a global economic recovery in 2014. For the recovery to be sustained, economic policies should be geared towards restoring the role of the private sector in the growth process and should foster productivity gains, increased employment and higher investment in the real sector.

“This is important to avoid a relapse as policy support is withdrawn,” she said.

On the fiscal outlook, Kuugongelwa-Amadhila noted that total revenue and grants for the MTEF was projected to increase by about 14,7 per cent annually on average.

She added that in nominal terms, revenue was projected to increase from a revised estimate of 43.87 billion Namibian dollars (NAD), (about 4.04 billion US dollars) in 2013/14 to N.dollars 52,47 billion in 2014/15 and average around N.dollars 59,8 billion over the MTEF.

The minister noted that the Southern African Customs Union (SACU) revenue for 2014/15 is estimated at N.dollars 18,12 billion or 34,7 per cent of total revenue, which comprises N. dollars 17,31 billion from current collections and N.dollars 812 million from surplus emanating from 2011/12.

“While the domestic revenue stream will contribute significantly to the expected revenue, a significant risk to the outlook derives from uncertainty regarding future SACU revenues due to ongoing reforms,” she stressed.

Kuugongelwa-Amadhila also expressed concern about the volatility of the Namibian dollar which is pegged to the South African Rand. This volatility is mainly ascribed to the initial decision by the United States Federal Reserve to taper its quantitative easing programme.

“While our exporters must have been quite content with the situation, depreciation puts upward price pressure on imported goods,”” she said, noting that although Namibia’s export earnings recovered well in 2013, the import bill also rose sharply, mainly as a result of emergency imports to respond to the drought situation and a strong fixed capital investment, including mineral exploration.

“Nevertheless, a smaller current account deficit is expected in 2013 compared to the previous year,” she stated.

The resilient performance of the economy is also reflected in the trading volumes and share price performance on the Namibian Stock Exchange (NSX). “Throughout 2013, the Bank of Namibia maintained its accommodative monetary policy. This was with a view to give the domestic economy room to gain momentum for growth amid uncertainties in the global economy,” Kuugongelwa-Amadhila said.

Private sector credit extension has increased steadily, buoyed by accommodative monetary policy. However, at the end of the third quarter of 2013, growth in the private sector extension slowed, mainly as a result of the reduced credit demand from businesses and households.

Despite the challenging economic environment, Namibia was able to have its sovereign credit ratings with both Moody’s and Fitch reaffirmed. This materialised because of the fundamentals of our country, and its economy remains robust and consistent. Namibia remains committed to consistently address weaknesses and sensitivities identified during the rating process in order to improve investor confidence,” she added.

Source: NAMPA