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Namibia at a Glance: 2005-06

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Namibia at a Glance: 2005-06 Country Report Namibia Namibia at a glance: 2005-06 OVERVIEW The priorities of the new administration under Hifikepunye Pohamba are to fight corruption, curb public spending and improve public services. Despite a promising start, a sustained effort will be needed to achieve a significant reduction in corruption, and the freeze on spending envisaged in the budget may cause the government some unpopularity. Slower growth of diamond output, and in 2006 a levelling-off in production by the Skorpion zinc mine and refinery, will cause GDP growth to slow to 4.2% in 2005 and 3.9% in 2006. Low food price inflation and import prices constrained by the strength of the Namibia dollar will cause overall inflation to fall to 3.5% in 2005. However, rising inflation in South Africa will push average inflation in Namibia to 4.2% in 2006. The current-account surplus is forecast to narrow to 9.1% of GDP in 2005 and to 5.2% of GDP in 2006 as the trade deficit widens and the balances on the services, income and current-transfers accounts deteriorate. Key changes from last month Political outlook • There is no change to the political outlook. Economic policy outlook • There is no change to the economic policy outlook. Economic forecast • Following the publication of revised estimates for sectoral growth in the fourth quarter of 2004, the Economist Intelligence Unit has lowered its estimate of real GDP growth in 2004 to 4.9%!our previous estimate, based on preliminary figures from the Bank of Namibia, was 5.7%. In consequence, we have lowered our forecasts for real GDP growth for 2005 and 2006, though we continue to believe that growth will slow gradually over the outlook period. • As a result of unprecedentedly low inflation in the first five months of 2005!food prices, which have the heaviest weighting in the consumer price index, have fallen by 0.6% since December!we have lowered our forecast for inflation in 2005 from 4% to 3.5%. July 2005 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1356-4218 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Namibia 1 Contents Namibia 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2005-06 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 17 Economic policy 21 The domestic economy 21 Economic trends 23 Mining 26 Energy 28 Fishing 30 Foreign trade and payments List of tables 9 International assumptions summary 12 Forecast summary 18 Government finances 19 Main expenditure allocations 20 Revenue and expenditure projections 20 Government financing operations 21 Central government debt 21 Gross domestic product 22 Consumer prices, 2005 27 Electricity sales 30 External debt 31 Namibia Power Corporation: foreign loans List of figures 12 Gross domestic product 12 Consumer price inflation Country Report July 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 . Namibia 3 Namibia July 2005 Summary Outlook for 2005-06 The priorities of the new administration under Hifikepunye Pohamba are to fight corruption, curb public spending and improve public services. Despite a promising start, a sustained effort will be needed to achieve a significant reduction in corruption, and the freeze on spending envisaged in the budget may cause the government some unpopularity. Slower growth of diamond output, and in 2006 a levelling-off of production by the Skorpion zinc mine and refinery, will cause GDP growth to slow to 4.2% in 2005 and 3.9% in 2006. Inflation will follow the trend in South Africa, falling to 3.5% in 2005 but rising to 4.2% in 2006. The current-account surplus is forecast to narrow to 9.1% of GDP in 2005 and to 5.2% of GDP in 2006 as the trade deficit widens and the balances on the services, income and current-transfers accounts deteriorate. The political scene The new administration is proceeding with the main tasks it has set itself. The establishment of the Anti-Corruption Commission has overcome its last parliamentary hurdle, and a new body to regulate Namibia’s parastatal organisations is to be set up. A coalition of Church groups and NGOs is campaigning for a basic income grant. Germany has proposed the establishment of a fund to work for reconciliation with the Herero people. Economic policy The budget for fiscal year 2005/06 (April-March) projects a deficit of just 1.2% of GDP, half the estimated budget outcome in 2004/05. The government’s medium-term economic framework projects surpluses in the two following years, leading to a reduction in government debt to well below 30% in 2007/08. The domestic economy The government projects that real GDP growth will average 3.6% over the next three years. Average year-on-year inflation was 1.9% in the first five months of 2005, less than half the average for the same period of 2004. The introduction of royalty payments for non-diamond-mining companies has been suspended, pending consultations between the government and the industry. The government and De Beers are to begin negotiating a new contract for the marketing of diamonds. Rössing Uranium is to continue mining operations until at least 2009. Paladin Resources is to go ahead with the development of the Langer Heinrich uranium mine. Plans to develop the Kudu gasfield and build a gas-fired power station are moving forward. A package of relief measures for the fishing industry has failed to prevent further bankruptcies. Foreign trade and payments Namibia’s foreign debt fell in local-currency terms in 2004, but rose in US- dollar terms. Nampower is responsible for 70% of parastatal debt and will have to borrow heavily to finance its proposed new gas-fired power station. Editors: Roger Boulanger (editor); Pratibha Thaker (consulting editor) Editorial closing date: July 14th 2005 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report July 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 4 Namibia Political structure Official name Republic of Namibia Form of state Unitary republic Legal system Based on the constitution of 1990 and Roman-Dutch law National legislature Bicameral; National Assembly, with 72 members elected by universal suffrage and serving a five-year term, and up to six non-voting members appointed by the president; National Council, with limited powers of review and 26 members, two of whom are nominated by each of the country’s 13 regional councils, serving a six-year term National elections November 2004 (legislative and presidential); next elections due in November 2009 Head of state Hifikepunye Pohamba, elected president by universal suffrage in November 2004, took up his post in March 2005 National government President and his appointed cabinet; last reshuffle in March 2005 Main political parties South West Africa People’s Organisation (SWAPO), the ruling party; Congress of Democrats (CoD); Democratic Turnhalle Alliance (DTA); United Democratic Front (UDF); National Unity Democratic Organisation (NUDO); Republican Party (RP) Prime minister Nahas Angula Deputy prime minister Libertina Amathila Key ministers Agriculture, water & forestry Nickey Iyambo Central Intelligence Service Lukas Hangula Defence Charles Namoloh Education Nangolo Mbumba Environment & tourism Willem Konjore
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