By Dhiladhila Magazine · Issue 12
The budget widens the deficit to support demand yet promises a lighter debt ratio. Only growth reconciles the two.
On 28 February 2024, Finance Minister Iipumbu Shiimi tabled a N$100.1 billion (about US$5.3 billion) budget for 2024/25 that set out to do two awkward things at once: spend more to support domestic demand, while insisting the country’s debt burden would ease. The statement made the claim plainly, pairing a wider deficit with a lighter debt ratio under a single fiscal theme.
The arithmetic is what makes it worth reading closely. The deficit widens to N$8.9 billion, equal to 3.2 per cent of output, yet the debt-to-GDP ratio is projected to fall to 60.1 per cent. The figure that reconciles those two moving parts is growth, and growth is the part a government cannot legislate.
A deficit that grows while the debt ratio shrinks
Total spending of N$100.1 billion is up 11.9 per cent on the previous year’s N$89.5 billion, while revenue of N$90.4 billion rises 11.5 per cent. Because expenditure grows a little faster than income, the gap between them widens rather than closes, leaving the N$8.9 billion deficit the minister chose to run in support of demand.
The debt stock climbs too, to N$165.8 billion. What falls is the ratio of that debt to the size of the economy, guided down to 60.1 per cent. That only happens when nominal output expands faster than borrowing, so the reassuring number rests entirely on the denominator doing its share.
A shrinking debt ratio beside a rising debt stock is a bet on growth, not a cut in borrowing.
Where the extra revenue is meant to come from
The revenue rise is pinned to four sources: higher receipts from the Southern African Customs Union, personal income tax, non-mining company tax and value-added tax. Of these, the customs pool is both the largest single line and the least controllable, since it is shared out from a common revenue pool dominated by trade flowing through South Africa.
That dependence sets a quiet limit on the budget. Namibia keeps its dollar pegged one-to-one to the rand and draws a large part of its income from a union it does not steer, so a share of Windhoek’s fiscal room is decided beyond its borders. A soft customs payout would undo the revenue maths quickly.
The budget leans on a revenue line Namibia collects but does not control.
The growth engines behind the projection
The projection assumes real growth of 4.0 per cent in 2024 and 3.9 per cent in 2025, helped by oil and gas exploration and by uranium output. The exploration story is real money already moving: since February 2022 the Orange Basin has drawn TotalEnergies to its Venus discovery and Shell to Graff, two ultra-deepwater finds that have made the offshore south a magnet for survey and drilling spend.
The caution is that these remain discoveries, not production. First oil is years away and the final investment decisions that would confirm it are still pending, so the activity now lifting the numbers is drilling and services, not export revenue. The growth that flatters the debt ratio is, in part, a promise still being tested offshore.
Exploration is lifting activity today; the production that would pay for the budget is not here yet.
The risk buried in the arithmetic
Servicing existing debt already costs N$12.8 billion, or 14.2 per cent of expected revenue – money that builds no clinic, road or school. As the debt stock grows, that first claim on the budget grows with it, and a rise in global interest rates or a weaker rand would enlarge it further.
The whole construction holds together only while growth stays ahead of borrowing. If output disappoints or the customs payout dips, the falling-ratio story reverses, and the choice the budget avoided – between supporting demand and cutting the deficit – returns in a harder form. Markets have so far read the mix as measured rather than reckless.
The plan works while growth outruns debt; it unravels the moment that stops being true.
For an investor or a policymaker weighing Namibian risk, the 2024/25 budget is a single wager written in two columns: demand support now, debt discipline later, both underwritten by a growth rate the government forecasts but cannot guarantee. The decision it forces is whether to trust the offshore-and-uranium growth story enough to lend into a rising debt stock, or to wait for the production and customs receipts that would turn the projection into fact.
Sources: The Namibian; Venus, Graff wells open frontier oil play offshore Namibia (Offshore Magazine); Economy of Namibia (Wikipedia)
