Namibia: 2026 Article IV Consultation-Press Release; and Staff Report

The war in the Middle East poses the most immediate risk to Namibia's economy, with higher fuel prices and weaker global demand as the main transmission channels. While Namibia has been relatively resilient to global trade tensions, they have further compounded the existing slump in diamond prices driven by lab-grown competition. Namibia has, however, benefited from higher prices for its two other key commodity exports, gold and uranium, which are likely to remain elevated amid global uncertainties. International oil companies continue to explore oil and gas investment opportunities, bringing in significant foreign direct investment (FDI). The administration, which took office in March 2025, is prioritizing job creation in the face of persistent high unemployment. A sharp decline in Southern African Customs Union (SACU) transfers has contributed to a weaker fiscal balance in FY25/26 and elevated public debt. Improving government expenditure efficiency and reducing the wage bill is essential to ease the debt-service burden and place public debt on a downward path. Meanwhile, the Bank of Namibia has brought its policy rate close to that of the South African Reserve Bank, with the rate currently 25 basis points below.