Namibia’s public finances came under renewed strain in the first half of the fiscal year as government revenue fell short of budget projections, widening the deficit and pushing public debt higher, the central bank said.
In its latest quarterly bulletin, the Bank of Namibia said revenue underperformance for the six months to the end of September weighed on the fiscal position, forcing authorities to revise borrowing needs upward.
“The deterioration was driven primarily by weaker-than-expected revenue collection, rather than higher spending,” the bank said.
The mid-year budget review lifted the projected central government deficit for the 2025/26 financial year to 6.0 percent of gross domestic product, from 4.6% set out in the March budget, and well above the 4.0 percent recorded in 2024/25.
As a result, government debt continued to rise, increasing by 10 percent year-on-year and 2.7 percent quarter-on-quarter by the end of September 2025. The rise was driven mainly by higher domestic borrowing, while external debt declined over the same period, the bank said.
External pressures also intensified. Namibia’s current account deficit widened to 8.8 percent of quarterly GDP, from 8.4 percent in the previous quarter and 7.8 percent a year earlier. The annual deterioration was largely due to lower receipts from the Southern African Customs Union (Southern African Customs Union), while the quarterly widening reflected a larger merchandise trade gap as imports grew faster than exports.
Both the current and financial accounts recorded deficits, forcing a drawdown of international reserves.
Foreign exchange reserves declined during the quarter, mainly because of net South African rand outflows by commercial banks, linked to portfolio investment exits, other investment flows and higher foreign payments by government and customers.
Despite the decline, reserves remained “adequate”, the central bank said, covering 3.6 months of imports and sufficient to meet the country’s external obligations.
The real effective exchange rate appreciated by 1.4 percent year-on-year, signalling a loss of trade competitiveness for Namibian exports, the bank added.
The bulletin paints a picture of mounting fiscal and external pressures as revenue constraints, rising debt and weaker competitiveness shape the country’s macroeconomic outlook heading into the second half of the financial year.
Economic growth, while still positive, showed signs of slowing. Domestic activity expanded for the eighteenth consecutive quarter, supported mainly by the services-driven tertiary sector. Annual real GDP growth reached 1.9 in the third quarter of 2025, up from 1.3 percent in the previous quarter but below the 2.1 percent recorded in the same period of 2024.
Agriculture remained under pressure as livestock marketing continued a steep decline, outweighing gains in crop production. In mining, overall output fell year-on-year, as stronger uranium production failed to offset weaker output of gold, diamonds and zinc concentrate.
The secondary sector recorded moderate growth, supported by increased domestic electricity generation following higher water levels at the Ruacana hydropower plant after above-average rainfall during the 2024/25 season.
From the expenditure side, growth was underpinned by higher private and government consumption and exports, while imports edged up and gross fixed capital formation declined.
Diamond production fell both year-on-year and quarter-on-quarter, reflecting deliberate output cuts amid challenging market conditions. Output dropped to 442,012 carats in the third quarter of 2025, down 3.5 percent annually and 15.3 percent from the previous quarter, largely due to reduced production at Debmarine Namibia in response to weak prices, rising demand for lab-grown stones and high inventory levels.
Uranium production rose 2.8 percent year-on-year to 2,450 tonnes, supported by better ore grades, reduced downtime and improved technologies, although quarterly output declined because of strip-mining activities. Average uranium spot prices fell to US$76.3 per pound from US$81.6 a year earlier, despite a quarterly rebound linked to renewed political support for nuclear energy in the United States.
Zinc concentrate output declined 23.5 percent year-on-year to 15,027 tonnes due to difficult mining conditions and flooding, while gold production slipped 6.6 percent to 2,421 kilograms amid lower-grade ore and resource depletion.
That contrasted with strong gold prices, which rose nearly 40% year-on-year, driven by global uncertainty, safe-haven demand and increased central bank purchases, providing some support to export earnings even as volumes fell.
