Government has described the International Monitory Fund, (IMF)’s recent calls to cut down on its expenditure or face a possible rugged economic future, as misplaced.
An IMF recent report advises Namibians to cut down on their borrowing and expenditure catapulted by the Targeted Intervention Programme for Employment and Economic Growth (Tipeeg).
The report also reiterates that Namibia’s borrowing on both the international market and domestic market has possible detrimental effects that could slide the economy into a recession amid an ongoing sovereign debt crisis in the European Union.
The Tipeeg programme was mooted by Government last year on a N$14b running budget for three years to stimulate economic growth and curb runaway unemployment, which now stands at a staggering 51.2%.
Deputy Minister of Finance, Calle Schlettwein this week told The Villager that the IMF is shooting in the dark this time around and made assurances that Namibia’s finances are prudent and the economy is doing pretty well for any economic shocks anytime soon.
“It is evident that the IMF’s pieces of advice in most countries have not really gone without causing untold pain to many economies. Their structural adjustment programmes have negatively affected economies in Africa and as a Government, we ought to listen to them but this time, their predictions are void of the situation on the ground and do not necessarily need to be followed,” said Schlettwein.
He added that the same IMF that is now quick to ring alarm bells about the country’s expansionary drive and increased spending is the same IMF that encouraged the Government to take advantage of the fiscal space available to grow.
According to him, the IMF is certainly rubbishing its own policy creation and this is not so credible for Namibia to follow.
“The same IMF told us to expand and take advantage of the fiscal growth opportunities, to expand the economy and now they say the red lights are on. There are no red lights in the Namibian economy. I can only concur that after three years of implementing our expansion policy, we need to be on the back foot and build again for the future but I cannot be scared that we are at risk of plunging our economy into a recession,” said the deputy minister.
Schlettwein maintained indicators on the ground do not show any signs of a possible recession and actually indicates that the Namibian economy can wither the storm, should an anomaly arise.
His sentiments have also been backed up by a research and analyst firm, IJG’s report released in late January, which shows that Namibian business confidence is at an all-time high.
According to IJG, the country’s cash cow; mining, which contributes about 10% to the Gross Domestic Product (GDP) is doing pretty well, although copper and zinc imports were a bit on the lower side.
The IMF has, in the past, advised most African countries including Zambia and Zimbabwe to cut down on social spending as a way of releasing pressure on the governments’ debts but in most cases, the economies of the countries, which took the advice, ended up nose diving.
In 1993, the IMF instituted the Economic Structural Adjustment Programme in Zimbabwe purportedly to encourage prudent financial policies and create room for growth in that country but the result was a mere collapse of public expenditure and social growth.