Structural Reforms Needed Now to Revive Namibia’s Economy, Says IMF

The International Monetary Fund (IMF) has called on Namibia to accelerate structural reforms and maintain fiscal prudence amid a fragile economic outlook marked by high unemployment, subdued growth, and climate-related shocks.

Concluding its 2025 Article IV Consultation, the IMF Executive Board acknowledged Namibia’s resilience in the face of global trade tensions and declining diamond prices. However, it emphasized the urgent need for inclusive, private sector-led growth to lift per capita income and reduce inequality.

Namibia’s GDP growth slowed to 3.7% in 2024, down from 5.4% in 2022, as severe drought conditions—the worst in a century—crippled agriculture, and global diamond market disruptions dampened output. Although inflation has eased to 4.2%, thanks to lower global food and fuel prices, the Fund projects only moderate growth of 3.8% for 2025 and 2026, with medium-term growth hovering around 3%.

The IMF praised the government’s commitment to fiscal discipline but urged deeper reforms, including civil service rationalization, state-owned enterprise restructuring, and improved public investment management. It also encouraged Namibia to increase public investment in climate resilience and social protection.

Directors advised aligning monetary policy with South Africa’s interest rate path to safeguard the currency peg and continuing efforts to improve financial sector stability. They also called for faster reforms to Namibia’s anti-money laundering system to remove it from the FATF grey list.

The IMF emphasized the importance of harnessing opportunities in oil, gas, and green hydrogen to diversify the economy and drive job creation. Bold structural changes—such as improving education, enhancing the business environment, and investing in digitalization—are essential, the Fund concluded.

The next Article IV Consultation with Namibia is scheduled for 2026.