Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today an outright purchase of SDR 191.1 million (about US$270.83 million) to Namibia under the Rapid Financing Instrument (RFI). This will help the country address urgent balance of payments and fiscal financing needs stemming from the negative impact of the COVID-19 pandemic. IMF financing will also contribute to catalyzing additional financing from development partners.
Namibia has been severely affected by the COVID‑19 pandemic. Worsening global conditions and a local outbreak have deteriorated Namibia’s short-term macroeconomic outlook, hindered mining exports, tourism, investment inflows and weighed on tax revenues. The Namibian economy is estimated to have sharply contracted by 7.2 percent in 2020, and the recovery is set to remain subdued at 2.1 percent in 2021.
The outright purchase under the RFI will provide needed financing to support the authorities’ implementation of their response to the COVID-19 crisis, including the purchase of vaccines and deployment of the vaccination campaign, and interventions needed to mitigate the pandemic’s severe socio-economic impact. Key elements include stepping-up emergency health and education spending, strengthening social safety nets to protect the most vulnerable from the impact of the crisis, and supporting the private sector and protecting jobs. The implementation of public finance governance mechanisms will ensure appropriate use and monitoring of resources to address the COVID-19 crisis.
Following the Executive Board’s discussion on Namibia, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, issued the following statement:
“Namibia has been severely affected by the COVID‑19 pandemic. Worsening global conditions and a local outbreak have worsened the short-term macroeconomic outlook. The economy is estimated to have sharply contracted in 2020 and the recovery is expected to remain subdued in 2021. Furthermore, the negative impact of the pandemic and needed mitigation measures have triggered urgent balance of payments and fiscal financing needs. The disbursement under the Rapid Financing Instrument will support Namibia in promptly addressing these needs and help catalyze additional financing from development partners.
“The authorities are implementing a comprehensive response plan to address the COVID-19 health emergency and mitigate its severe socio-economic impact. A temporary widening of the fiscal deficit will support undertaking emergency health and education spending, purchasing vaccines and infrastructure for distribution, strengthening social safety nets, and supporting the private sector. Non-priority spending was re-allocated to create fiscal space for emergency spending. Implementation of public finance governance mechanisms will ensure the appropriate use and monitoring of resources to address the COVID-19 crisis.
“Using external buffers will help respond to the shock. Monetary policy will continue to maintain adequate liquidity in the financial sector to support credit provision to the economy while sustaining the currency peg. Preserving financial stability, while supporting the private sector, will be important.
“As the impact of the crisis subsides, the authorities will implement a growth-supporting medium-term fiscal consolidation aimed at preserving debt sustainability. To this end, moving forward with planned fiscal reforms to increase expenditure efficiency and mobilize additional tax revenues will be key. Structural reforms remain essential to promote broad-based, inclusive growth.”