Namibia shot in the arm by AfDB
After approaching the African Development Bank ((AfDB) early this year for a partial budget deficit financing instrument for the current 2017/18 fiscal year and the 2018/19 fiscal year, Namibia managed to secure a N$10 billion loan.
Finance minister Calle Schlettwein on Thursday at media meet confirmed the move, following Wednesday’s announcement by AfDB to boost Namibia Economic Governance and Competitiveness Support Programme (EGCSP) with a loan of US$226.5 million.
According to the Minister, the envisaged combined total amount of the operation over a two-year period is up to N$10 billion. “To be split in a ratio of 60:40 for Programme-based Operation supporting the general budget deficit financing and for targeted financing of development projects respectively,” he said.
“In respect to the Programme-based Operation financing, the total combined amounts for two years is N$6 billion, to be equally split into equal tranches of N$3 billion each over the two-year period. Of course, deficit financing includes some of the development spending which supports infrastructure development,” he further explained.
Schlettwein said the N$4 billion that will support infrastructure financing is significant from the point of view of supporting long-term economic growth and job creation objectives.
“The details of the specific split across the infrastructure project pipeline will be developed in interaction with Offices/Ministries and Agencies concerned as well as with the AfDB,” he added.
The Minister said the loan facility will not result in additional debt above the budgeted debt levels.
“This is not an additional loan over and above the budget and Medium-Term Expenditure Framework. It is also not a budget support facility that enhances the budget per se. Rather, it is, as I have stated, a financing mechanism to partially fund the budget deficit as projected in the budget and MTEF. The Programme-based Operation alone will thus finance about half of the budget deficit this year,” he stressed.
Meanwhile, going forward, he said the government will engage AfDB on the specific elements of disbursement and appraisal of the infrastructure projects that are earmarked for targeted funding under this operation.