The International Monetary Fund says reforms are necessary to address high unemployment and income inequality in Namibia.
The fund said in a statement that priority should be given to reducing skill mismatches through targeted education and training programmes, simplifying business regulations, including improving the functioning of the labour market.
The IMF said it welcomed the authorities’ intention to improve the targeting of key social assistance programmes, including cash transfers and housing subsidies to make further inroads in reducing inequality and poverty.
“Namibia has experienced remarkable growth and economic progress. Strong policy frameworks and expansionary domestic policies have contributed to macroeconomic stability, robust growth, and rising living standards. Yet, deep-rooted structural impediments have kept unemployment high and unresponsive to growth, contributing to persistently high inequality.”
The IMF said it recognised that Namibia’s financial sector is generally stable, and called for continued efforts to monitor and manage risks from rising housing prices, household indebtedness, and linkages between banks and non-banking financial institutions.
The IMF commended the central bank for introducing loan-to-value-limits for non-primary residence purchases, and recommended that further targeted macro prudential measures to tame housing price dynamics be explored.
“Directors recognised that the tight linkages between banks and non-banking financial institutions are macro critical and stressed the importance of monitoring and assessing possible financial stability risks from such linkages. In this context, directors encouraged steps to improve the financial regulatory architecture and to enhance the central bank’s capacity to assess macro financial risks and exercise macro prudential controls,” it said.