Second tranche budget support loan of N$3 billion approved by AfDB
The African Development Bank this week approved the second tranche budget support loan of N$3 billion, to finance the second phase of the Namibia’s Economic Governance and Competitiveness Support Programme (EGCSP II).
The total loan package consists of N$10 billion of which N$6 billion is budget support (2017/18 and 2018/19) and N$4 billion project financing over a 5-year period
According to a statement from the bank, the loan will support the budget for the fiscal year 2018/19 and aims at strengthening public financial management and improving the quality and efficiency of public sector spending, while laying a solid foundation for industrialization through support to critical business environment reforms, according to a statement.
“The programme builds on Phase 1 approved last year, which has achieved positive results. These include reduction of the budget deficit from 8.2% of GDP in 2015/16 to 5.4% in 2017/18,” AfDB added.
AfDB said that the Bank was, therefore satisfied with progress made by the Namibian government under the Phase I of the programme, despite the significant economic challenges caused by declining commodity prices, persistent drought and subdued economic activity in South Africa and Angola.
According to the bank, the loan will also help to improve the country’s liquidity situation at a time when domestic market liquidity was low, occasioned by constrained cash flow; and funding to retire pending invoices in critical ministries, including education and health, which helped to avoid a looming crisis of private credit crunch.