…FMD, drought, fuel pose highest risk
Economists say Namibia is likely to borrow more and have less to spend on public services this year as finance minister Ericah Shafudah tables the mid-term budget review today.
They say the problem is not only that revenue is falling short.
Most of the N$104-billion budget tabled in February is already committed to salaries, social programmes and debt interest, leaving little room to adjust when income drops or new costs appear.
Foot-and-mouth disease (FMD) and the threat of drought are now adding to spending pressures that were not anticipated six months into the 2026/27 financial year.
This comes as 93% of spending is tied up in operational costs, N$16 billion goes towards debt interest and revenue is falling.
WHAT ECONOMISTS EXPECT
Economists expect the government to revise its financial projections as economic conditions have changed since the budget was presented in February.
Economist Almandro Jansen estimates that government revenue could fall to N$87.5 billion, about N$2.1 billion below the N$89.6 billion budgeted.
He also expects expenditure to rise to N$106.9 billion.
This will widen the budget deficit to N$18.7 billion, or 6.5% of gross domestic product (GDP), from the budgeted 5.5%.
The government originally planned to spend about N104.1billion during the financial year,including N$16.2 billion on interest payments on public debt.
“Interest costs could rise to N$16.6 billion,” Jansen says.
The increase would leave less room for other spending because the government must meet its debt obligations alongside salaries, social grants, public services and infrastructure projects.
REVENUE UNDER PRESSURE
The Namibia Revenue Agency (Namra) collected N$17.1 billion in the first quarter, equivalent to 20.7% of its annual revenue target.
This was below the 25% it would need to collect by that point to remain on track.
Weak mining activity is another concern, as the government receives revenue from mining companies through taxes, royalties and dividends.
Jansen expects shortfalls in corporate tax, value-added tax (VAT) and non-tax revenue.
He estimates corporate tax could fall N$800 million below budget,VAT by N$700 million and non-tax revenue by N$500 million.
“Namibia can still fund itself, but increasingly at home, at higher cost and on shorter notice,” Jansen says.
Economist Ida Williams from Cirrus Capital also expects the revenue estimates to be revised.
“We expect a significant revision on the revenue estimates of the year given the most recent Namra figures point to lower than expected recoveries,” Williams says.
She adds that development expenditure could also be revised.
FMD, DROUGHT ADD NEW DEMANDS
The government may need to redirect money to FMD control, agricultural support and drought preparedness.
Jansen estimates disease control, surveillance, fencing and farmer support could add about N$600 million in unbudgeted spending this year, while drought is a further risk.
Williams says rising global fuel prices have raised costs for sectors such as agriculture, while higher grain prices and the prospect of poor rainfall could push up food inflation.
“Some funding towards drought relief is expected,” she says.
WILL INFRASTRUCTURE GET THE PROMISED FUNDS?
The April development budget allocated N$1.79 billion to transport, N$744.3 million to urban and rural development, N$588.4 million to education, N$489.7 million to health and N$378 million to water affairs, according to the budget breakdown compiled for this review.
The allocations included road rehabilitation and railway upgrades, school construction, hospital improvements, water supply schemes and other public infrastructure.
Speaking ahead of the review, Shafudah had spoken on the challenge of implementing the budget.
“The problematic stage is when we go to implementation,” she said.
She also called for government commitments to be scrutinised by asking how far agencies have progressed with promises made to the public.
The post Shafudah faces tough choices as revenue falls short appeared first on The Namibian.