- Namibia cuts development spending by 9.38% amid slower growth
- Public debt rises to $10.14 billion as fiscal challenges persist
WINDHOEK, NAMIBIA – Namibia has unveiled a $5.14 billion (NAD 89.4 bn) mid-term budget for the 2025/26 financial year, underscoring fiscal restraint as economic growth slows and public debt mounts.
Finance Minister Ericah Shafudah told Parliament in Windhoek that the budget aims to sustain economic stability and protect priority spending amid global uncertainty. The move comes as growth forecasts have been revised downward to 3.3% for 2025, from an earlier 4.5% projection in the main budget announced in March.
“The mid-year budget and medium-term budget policy statement for the 2025/26 financial year were developed against a persistent slowdown in economic growth projections and fiscal challenges,” Shafudah said.
The budget provides a snapshot of fiscal performance halfway through the financial year, reflecting how the government is balancing its priorities against mounting fiscal pressures.
Debt pressures and fiscal discipline
The development budget was cut from $552 million to $506 million (NAD 9.6 bn to NAD 8.8 bn) – a 9.38% reduction – as the government reallocated spending to manage growing debt and rising interest costs.
According to the Economic Association of Namibia (EAN), the budget reflects fiscal prudence in a challenging macroeconomic environment.
EAN Chief Executive Officer Cons Karamata said Namibia’s public debt has climbed to $10.14 billion (NAD 176.3 bn), with interest payments now reaching $822.3 million (NAD 14.3 bn).
“The budget displays Namibia’s fiscal prudence in keeping the global appropriation, particularly in a context where public debt has risen,” Karamata said.
However, Karamata warned that the reduction in the development budget signals persistent implementation challenges.
“While this adjustment helps balance short-term fiscal pressures, it also indicates a continuing challenge in translating budgeted development allocations into actual project delivery on the ground,” he said.
He noted that infrastructure, logistics, water, electricity, land servicing, agro-processing and youth enterprise initiatives are vital to stimulate employment and growth under Namibia’s sixth National Development Plan (NDP6).
“Capital expenditure is the main driver of infrastructure-led growth, job creation, and economic diversification — all central to the ambitions of NDP6,” he said.
Economists urge focus on capital spending
Economist Klaus Schade said the reallocation of funds to operational expenditure risks undermining long-term growth prospects.
“The reallocation to operational expenditure implies that necessary investment in infrastructure is not undertaken that would support future economic growth,” he said.
He added that capital expenditure strengthens Namibia’s asset base and attracts both domestic and foreign investment.
“It improves the country’s asset base and its infrastructure and is crucial to attract domestic and foreign direct investment,” Schade said.
The government’s reprioritisation strategy has channelled funding towards essential sectors such as education and health, as well as emerging industries including green energy, oil, and gas – a shift Karamata described as “appropriate and consistent with the realignment required under NDP6.”
While Namibia remains committed to fiscal sustainability, analysts warn that without accelerating development spending and improving project execution, the country’s growth ambitions could falter in the face of persistent fiscal headwinds.
