Experts anticipate revenue to undershoot by 2.3%
The Minister of Finance is expected to table the Medium Term Budget Review early this month and local, stock broker and wealth management firm, Simonis Storm Securities (SSS) expects revenue to undershoot by 2.3%.
The firm said in addition, the South African economy will remain under pressure over the medium term, with growth expected at 1.1% for FY2018/19 and 1.5% for FY2019/20.
“Thus, we believe that Namibia’s share from SACU revenue will remain under pressure going forward. Namibia has been one of the main beneficiaries from the SACU revenue pool compared to its peers, with its share averaging 17.3%,” SSS said.
“With tax collection expected to come in lower than expect and reduction in SACU revenue, we project government revenue to be under severe pressure. On 25 October BoN left the Repo rate unchanged at 6.75%. According to the monetary policy statement released, this level is deemed appropriate to continue supporting domestic economic growth,” they added
According to SSC on the Namibian fixed income front, they expect bond yields to increase mainly due to the increase in the benchmark bond yields (SA government bonds) as the probability of a credit downgrade in South Africa increased.
“On the other hand, investors could enjoy some temporary cutback over the coming weeks provided further credit rating downgrades in SA are avoided next month,” they added.
In terms of the Monetary policy stance, SSS said, the Bank of Namibia cut interest rates by 25bps this year to 6.75%. “Looking at the economic indicator, it is justifiable for Bank of Namibia to cut by another 25bps at its next meeting in December. However, due to the current depreciation of the ZAR, we expect inflation to remain moderately high and interest rate cuts to be on hold both in South Africa and Namibia this year.”