By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) Wednesday reported that the Namibian banking system is highly profitable, well-capitalised and with relatively low nonperforming loans.
The IMF’s executive board reported this at the conclusion of the Article IV consultation with Namibia without a meeting.
Apart from high profitability in the country’s banking system, the IMF says favourable credit conditions also supported domestic demand growth in recent years. ‘’The 2011–21 Namibia Financial Sector Strategy (NFSS) is sound and strikes an appropriate balance between financial inclusion and stability.
According to the Fund, the Bank of Namibia’s semi-annual Financial Stability Reports have also rightly focused on the challenges that could emanate from the high household indebtedness and recommended appropriate policy responses to minimize the associated risks.
The IMF board affirmed that output growth would further moderate to about four percent (4%) in 2013.
‘’Namibia has made impressive strides in economic development since gaining independence in 1990. The positive growth record in recent years has raised overall incomes and delivered good economic outcomes,’’ the IMF said.
Also, the Fund’s staff said they welcome a tightly focused 4th National Development Plan (NDP4) which serves as the authorities’ blueprint for structural transformation. ‘’NPD4 that emphasizes returning to high and sustained growth, reducing income inequality and enhancing job creation through reforms that lay the foundation for greater private sector development,’’ the IMF board said.
Similarly, the IMF board further affirmed that Namibia’s real Gross Domestic Product (GDP) grew by a healthy 5% in 2012, but said preliminary data for the first half of 2013 suggest that growth moderated; ‘’the slowdown reflects weak global demand for exports, which more than offset the solid growth in the nonmineral sector, most notably in retail trade. At end-October 2013 inflation stood slightly below 5%,’’ the Fund said.
The Fund said fiscal outturn in the FY2012/13 (starting April) was significantly better than targeted; the overall deficit was 0.35 compared to 3.9% projected in the original budget. ‘’The strong performance reflects revenue over performance and some under-execution in capital spending,’’ the board said.
The IMF reported that reflecting on the fiscal withdrawal in FY2012/13, the current account deficit narrowed to 2.6% of GDP in 2012 from 3.5% in 2011.
It said the outcome was driven mainly by an increase in official transfers in the form of higher-than-projected Southern African Customs Union (SACU) revenues, and savings made in capital spending. ‘’Despite the narrowing of the current account deficit, the official reserves coverage stood at just 3 months of imports at end-2012,’’ the IMF said.
According the Fund’s executive board, achieving sustainable growth in Namibia would require a set of reform-oriented innovative policies to reinvigorate productivity growth. ‘’These include increasing the quality of public spending, improving the business environment, implementing supportive measures to liberalize the service sectors, reducing the domestic regulatory burden on firms and the skill mismatch in the labour market,’’ the Fund’s board affirmed.
