In 2016, the public deficit widened significantly as a result of the government's expansionary fiscal policy adopted in order to support growth. However, in autumn 2016, the government embarked on a process of fiscal consolidation, which should help reduce the deficit in 2017. This is because, a decline in capital spending is anticipated, while current spending will remain stable and still directed towards the key sectors (health, education…). At the same time, income related to mining exports will boost revenues. Moreover, customs duties returned to Namibia under the South African Customs Union, which contribute about a third of the country's tax receipts, will remain modest. Finally, although tax collection is not ideal, progress will start to be made once a new tax office has been established at the beginning of the 2017/2018 financial year.
In 2017, the public debt could still exceed the cap of 35% of GDP set by the government. In essence this is local debt (70%), mostly denominated in Namibian dollars and in South African Rands.
The current account deficit could narrow in 2017. Exports will be higher, especially those of uranium. The expected increase in the price of and demand for diamonds (almost 27% of exports) will thus boost exports of mining products. In addition, the economic partnership agreement, providing for duty-free and quota-free access to the European market, concluded in June 2016 between the European Union and six countries of the Southern African Development Community (including Namibia), will offer promising trade prospects. Namibian exports will remain vulnerable to the evolution of growth in South Africa (the country's primary trading partner, accounting for almost a quarter of exports), which will remain weak in 2017. Finally with the expected slowdown in infrastructure projects, imports of capital goods are likely to be less dynamic.
In 2017, the Namibian dollar, pegged to the South African rand, will continue to be vulnerable to the downward pressure and high volatility of South Africa's currency.