NAMIBIANS have the right of information about the loans that the government is looking to take out, how these funds will be used and how they will be repaid.
Don’t assume that just because someone offers the state money, it means the treasury must accept it.
These are the reservations of the Institute for Public Policy Research, which is calling on the Ministry of Finance to publish details of Namibia’s debts in the national budget.
IPPR joins the opposition leaders calling for parliament’s approval of all foreign loans to government.
“This would oblige the minister to explain to parliament why a loan is being taken, what impact it will have,and how it will be repaid,” said IPPR executive director Graham Hopwood.In less than a month, finance minister Iipumbu Shiimi will table the national budget for the 2023/24 fiscalyear and it is expected to have the national debt level reaching over N$150 billion.IPPR said before Shiimi’s time in office, questions were already lingering on debt sustainability during former finance minister Calle Schlettwein’s tenure.
For the next year, it is anticipated that debt levels will exceed 70% of Namibia’s output. This compares to approximately 56% during Schlettwein’s years 2015/16.
Due to high levels of debt, despite slow economic growth, Namibia has been subject to credit rating agencies’ harshest criticisms and subsequent high debt servicing levels.
These funds were borrowed through the Bank of Namibia.
Panduleni Itula, leader of Independent Patriots for Change (IPC), stated last year that the Ministry of Finance should stop borrowing money without consent from Namibia’s parliament.
“The Ministry of Finance goes around borrowing money from everywhere else. We, the taxpayers will be responsible for paying.
You will be liable for paying all that debt… yet you have not been consulted by anybody during the borrowing of that money,” he had said.
These frustrations are shared with the IPPR. Loans have been taken from multilateral financial institutions like the African Development Bank (AfDB), the World Bank, or the International Monetary Fund.
According to the IPPR, there are loans that were also negotiated by the state with China and Germany. According to the research agency there is little information available on bilateral loans from China. This makes accountability difficult.
The government provides guarantees for loans that are taken out by public organizations, primarily public enterprises, in addition to loans it takes out.
IPPR stated that foreign and domestic loan guarantees amount to N$2 billion and N$8,1 trillion, respectively. They also emphasize the importance of tightening fiscal belts and reducing debt-to-gross national product.
“Paradoxically, this goes hand in hand with the government continuing to sign ever bigger agreements for more debt,” said the agency.Other countries also borrow, and IPPR said Namibia has the highest level of debt within the Southern African Customs Union (similar to South Africa) but that within the Southern African Development Community, Angola,Mauritius, Mozambique and Zambia have higher levels of debt.
At a high level of debt, IPPR said Namibians should ask what the country has “to show for all this borrowing?”.Steps need to be taken to ensure that debt doesn’t become a problem, as it is for Zambia, and the research agency wants all public debt to be centralised, and for parliament to be given the authority to approve all foreign loans to the public sector, as is the case in neighbouring Botswana.
Third, all loans should be subject to greater economic scrutiny.“Namibian debt is approaching levels that in other countries have led to debt distress.
Future it should be much more cautious when taking on new debt. Just because someone offers you a loan, does not mean you should take it,” said IPPR.
Finance ministry’s spokesperson Wilson Shikoto said the IPPR call is not new, and approval happens through parliament.“Parliament is currently involved in approving the national budget, which is referred to as an appropriation bill after approval.
The national budget, which is presented to parliament annually by the minister for finance, includes the revenue and expenditure as well as the budget deficit’ (the difference between revenue and spending).
The change inthe debt is the function of the level of the deficit, approved by parliament through appropriation,” he said.Email: [email protected]: @Lasarus_A
Source: namibian
