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We don’t need an IMF loan – Nico Smit

Economist Nico Smit says he is baffled that Namibia has had to request for a higher loan from the International Monetary Fund than that requested by South Africa saying that this will sink the economy deeper into debt.
Namibia has reached out to the lender for a N$4.5 billion loan to cushion the economy from further Covid-19 shocks which continue to rattle jurisdictions across the world.
For its part, South Africa has been offered a N$4.3 billion loan.
Smit said, “Let’s look at the situation between Namibia and South Africa. South Africa has more than 460 00 cases against Namibia’s 1 977. People are dying there. Just more than 7 200 against Namibia’s 8. What is the population of South Africa against Namibia? South Africa borrowed N$4.3 billion. We borrowed N$4.5 million. What is going on? Look at how many cases they have but we borrow N$200 million more than South Africa. To do what with it?”
Smit said the borrowing has been a highly opportunistic affair.
On South Africa, Geoffrey Okamoto, First Deputy Managing Director and Acting Chair issued the following statement:
“South Africa’s economy has been severely hit by the COVID-19 crisis, reporting the highest number of cases in sub-Saharan Africa. A deep economic recession is unfolding as the decline in domestic activity and disruptions in the global supply chain resulting from the COVID-19 shock have added to a pre-existing situation of structural constraints, subdued growth, and deteriorating social outcomes.
“The authorities responded swiftly to the crisis. The June Supplementary Budget Review presented to Parliament contains a plan to reprioritize budget appropriations toward health and mitigation spending and devote additional budgetary outlays to protect the poor, the unemployed, and the most affected businesses. The South African Reserve Bank (SARB) took strong and timely action by lowering significantly the policy rate and ensuring adequate liquidity conditions in the financial system.”
Yet Smit has said the loan for Namibia comes as a shock.
“The reason why I am shocked is that really we are sitting with such a huge debt in this government and our deficit on the current budget is 54.8% and with this loan of up to N$4.5 billion, it goes up to 68.7%. Where are we going to get the money to pay these loans back? This government is just dumping Namibia and its people deeper and deeper into debt.
The generations to come will suffer under this debt. Our economy is in a situation like this and the level where we are, where is the money going to come from? We will not be able to pay the interest on this debt. This is the first time in 30 years that we are borrowing. We jumped into the queue to just grab that money.
“We have budgeted N$8.1billion for the Covid-19. In the budget, it was spread over four divisions. But it was so unclear. There was no indication of what they are going to use that money. I asked that question in parliament. For what are you going to use this N$8.1 billion? They could not answer. And also, I said how do arrive at a figure like N$8.1 billion. And you won’t prove to me what you are going to do with that money. Ridiculous!” he exclaimed.

Julia Heita

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