[{"bbox": [83, 105, 1146, 342], "category": "Text", "text": "While the public debt ratio has been rising since 2010, the pace of the increase had been slowing prior to the COVID-19 pandemic, reflecting fiscal consolidation efforts but then accelerated to a large extent as a consequence of the COVID-19 pandemic. During FY10/11–FY19/20, Namibia's public debt-to-GDP ratio increased from 16% of GDP to 59.9% of GDP, as the primary deficit averaged about 4.1% of GDP. Sharp increases in current spending, particularly the wage bill and transfers to SOEs, contributed to large fiscal deficits and to increasing debt. In response, the authorities started to implement in FY16/17 a medium-term fiscal consolidation plan, which reduced primary spending by about 8% of GDP by FY19/20. Despite the authorities' efforts to contain public spending, large primary deficits were recorded due to subdued growth and volatile Southern Africa Customs Union (SACU) trade related tax revenues."}, {"bbox": [83, 369, 1146, 451], "category": "Text", "text": "The 2022/23 Budget speech¹⁶ identified that the stock of public debt is reaching 83.8% of GDP from 71.7% in 2021/22. In financial terms this is from N$125.8 billion to N$140.2 billion. Moody's downgraded Namibia to Ba3 in December 2020, to account for the impact of the COVID-19 crisis."}, {"bbox": [83, 476, 1146, 531], "category": "Text", "text": "Whilst social transfers grew in response to the pandemic, they are projected to fall as Namibia emerges from the pandemic and services (including tourism) recover."}, {"bbox": [83, 556, 1146, 740], "category": "Text", "text": "As noted by the IMF, in response to rising gross financing needs, the authorities have been diversifying their funding sources and borrowing instruments, increasing external borrowing and extending maturities of domestic debt. Aside from the IMF Covid Recovery, funding the domestic market remains the government's main source of financing. Banks tend to buy short-term debt, while non-bank financial institutions focus on the long-term fixed rate and, to a lesser extent, inflation-indexed debt instruments. Moreover, in 2018 the authorities enforced a regulatory change, increasing the minimum required investment in domestic assets for pension funds and other institutional investors from 35 to 45% of assets."}, {"bbox": [83, 768, 1146, 819], "category": "Text", "text": "In conclusion, the authorities are pursuing a stability-oriented macroeconomic policy and the eligibility criterion is met."}, {"bbox": [100, 848, 476, 877], "category": "Section-header", "text": "### 2.3.4 Public Financial Management"}, {"bbox": [83, 885, 1146, 1016], "category": "Text", "text": "The GRN performs well with respect to many aspects of its budget preparation and expenditure management process. Key documents are published on the Ministry of Finance (MoF) website in a timely manner. It performs comparatively well with respect to external scrutiny, although there are curious omissions: its last Public Expenditure and Financial Accountability (PEFA) report undertaken in 2016 and completed in 2017 was not published on the PEFA website."}, {"bbox": [83, 1044, 1146, 1152], "category": "Text", "text": "The existence of an Integrated Financial Management Information System (IFMIS) and Medium Term Expenditure Framework (MTEF) are positive in terms of creating a solid foundation for PFM. The separation of the recurrent budget (under MoF) and the Development Budget (under the NPC) is not consistent with best practice, as it makes it more challenging to integrate the recurrent cost implications of public investment decisions into budget allocations."}, {"bbox": [83, 1177, 1146, 1338], "category": "Text", "text": "Fiscal constraints, including the consequences of the COVID-19 pandemic, have undermined the budget preparation process and expenditure management predictability. Absorption capacity has been low, especially for the capital budget. The Development Budget Book for 2022/23 reveals that average absorption has dropped from 89% in 2019/20 to 82% in 2020/21 and 58% in 2021/22. Much of this will have been the consequence of the Covid pandemic but its future performance should be monitored as an indicator of the realism of the planning and expenditure management cycle."}, {"bbox": [83, 1362, 1146, 1520], "category": "Text", "text": "Under the 10th EDF the EU funded the Public Finance Management Institutional Capacity Building Programme (EU PFM ICDP). The Final Report was prepared in December 2019. The Programme included a significant focus on strengthening the capacity of the Office of the Auditor General. The Office of the Auditor-General (OAG) is a member of International Organization of Supreme Audit Institutions (INTOSAI) and has, since 2010, adopted the International Standards for Supreme Audit Institutions (ISSAIs) framework. The Auditor-General of Namibia has been the Vice President of AFROSAI and Chair of its Finance and Administration Committee from 2017 - 2020."}, {"bbox": [72, 1587, 1002, 1638], "category": "Footnote", "text": "¹⁶ FY2022/23 Budget Statement Reimaging, a Better Future for the Youth, Iipumbu Shiimi, Minister of Finance\n24 February 2022Available online: www.mof.gov.na"}, {"bbox": [572, 1661, 657, 1688], "category": "Page-footer", "text": "Page | 14"}]