Sixteenth International Conference on Environmental, Cultural, Economic & Social Sustainability

Abstract

It came as a surprise to most Namibians and many in the international community in 2016 that the government of Namibia, a seemingly well-governed and prosperous country, was broke and could not honour budgetary obligation to the health, education and construction sectors. Contractors of major infrastructure projects could not be paid, hospital supplies were drying out, school fees had to be raised for programmes to continue, and school feeding programmes for disadvantage communities were scaled down. Since the 2016 National Budget, the term ‘consolidation’ has been applied to successive budgets indicating reductions in government spending and contraction of the economy. Two rating agencies, Standard and Poor’s and Moody’s have both downgraded the credit rating of the economy to junk status. How did middle-income resource-rich Namibia sink to this depth? What happened to export earnings, revenue from various taxes and royalties, and their disbursed in the period leading up to 2016? To what extent did government spending deviate from trend and could that be responsible for the financial crisis? This paper will investigate these issues and shed light on the causes of the financial crunch. This is necessary to forestall reoccurrence and ensure sustainability of the Namibian economy.