Fitch Ratings is of the view that the domestic economy remains under recessionary pressure, as it downgraded Namibia's creditworthiness to BB with a stable outlook from BB+, on 1 October.
The international ratings agency made the decision on the back of external shocks arising from the impact of the prevailing severe drought condition, elevated risks of contingent liabilities from certain Public Enterprises and lower sub-regional growth outlook.
The agency commended government for reducing the primary deficit, excluding SACU revenues, by a sizeable 7.6% over the past four years and financing flexibility on the back of a well-capitalized banking and non-bank financial sector with a combined asset base in excess of 150% of GDP.
Finance Minister, Calle Schlettwein in an issued statement, said government in collaboration with the private sector, has already commenced with the implementation of growth enhancing measures including the implementation of an increased development budget by 42.2%, from N$5.5 billion to N$7.9 billion in 2019/20 financial year as a lever for supporting domestic economic activity.
Additionally, Schlettwein added that the implementation of the project financing arrangements with the African Development Bank to the tune of N$4 billion over the next three years for the agricultural mechanization program, rail and road infrastructure projects as well as essential public infrastructure projects in the education sector have reached an award stage.
Government is further looking at other measures to enhance the domestic economy, including; the implementation of SME and youth entrepreneurship financing facilities at the Development Bank of Namibia, implementation of directives for local sourcing and local empowerment provisions in public procurement sphere and the implementation of Public Enterprises and state assets reforms within the framework of the Public Enterprises Act and effectively managing contingent liabilities arising from certain Public Enterprises.
The minister stated that government is also looking at the implementation of public-sector wide wage bill reforms to reduce the wage bill as a proportion of Gross Domestic product and total expenditure.
"We are confident that these policy packages will place the economy on a firm positive and sustainable growth trajectory over the medium to long term. Throughout the years, Namibia has demonstrated its ability and resilience to deal with shocks and also to direct policy actions to addressing socio-economic development needs," Schlettwein said.