Finance Minister Ericah Shafudah has unveiled a N$106.3 billion budget for the 2025/26 financial year, striking a delicate balance between fiscal consolidation and targeted investments to stimulate economic growth. Tabled under the theme “Beyond 35: For a Prosperous Future,” the budget reflects Namibia’s aspirations as it celebrates 35 years of independence, while grappling with global economic uncertainties and domestic challenges such as unemployment, inequality, and climate vulnerabilities.
The budget comes against a backdrop of modest revenue growth, with total revenues projected at N$92.6 billion—a 1.9% increase from the revised 2024/25 estimates. This constrained revenue outlook is attributed to a N$6.9 billion shortfall in Southern African Customs Union (SACU) receipts and subdued contributions from the diamond sector, where global demand remains weak. To mitigate these headwinds, the government has deferred N$1.6 billion in dividends from the dissolution of Namibia Post and Telecom Holdings (NPTH) and redirected N$450 million from the sale of Mobile Telecommunications Company (MTC) shares to the 2025/26 fiscal year.
Despite these challenges, the government remains optimistic about improved domestic revenue streams. Value-Added Tax (VAT) collections are expected to rise by N$2.6 billion, while income tax from individuals and non-mining corporate taxes are projected to increase by N$1.8 billion and N$1.3 billion, respectively. Over the medium term, revenue growth is forecast to average 5.2%, surpassing the N$100 billion mark by 2027/28.
Expenditure priorities: infrastructure and social protection
The N$106.3 billion expenditure framework prioritizes infrastructure development, social protection, and youth empowerment. Operational spending accounts for N$79.8 billion, while development expenditure—critical for addressing infrastructure bottlenecks—has been allocated N$12.8 billion, a 22.6% increase from the previous year. This includes N$3.2 billion in projects funded through external loans and grants. Debt servicing remains a concern, consuming N$13.7 billion or 14.8% of revenues.
Key sectoral allocations include N$24.8 billion for education, aimed at improving access and quality, and N$12.3 billion for health, with N$780 million earmarked for expanding healthcare infrastructure. The agriculture sector receives N$2.6 billion to bolster food security, including funding for Phase II of the Neckartal Dam Irrigation Project. Transport infrastructure is allocated N$2.7 billion, targeting road and railway upgrades, while N$1.3 billion is dedicated to youth and sports programs, including the construction of Category 2 stadiums.
Social safety nets remain a priority, with N$7.2 billion allocated to social grants. The Office of the Prime Minister has introduced a digital voucher system for food relief, enhancing efficiency and supporting local retailers. Meanwhile, the Anti-Corruption Commission receives N$116.5 million to strengthen governance.
Debt management and fiscal sustainability
Public debt stands at 66% of GDP, with a target to reduce it to 62% by 2025/26. A major focus is the redemption of a US$750 million Eurobond in October 2025. The government has accumulated US$463 million in a sinking fund and plans to raise an additional N$3 billion (US$162 million) domestically to settle the balance. This strategy aims to insulate Namibia from exchange rate risks, with over 80% of debt stock to be denominated in local currency post-redemption.
The budget projects a primary surplus of 0.3% of GDP, with the deficit narrowing to 4.6% of GDP. Over the medium term, the government aims to maintain an average deficit of 4%, supported by prudent debt management and cost-effective borrowing.
Tax reforms to spur growth
To stimulate economic activity, the budget introduces several tax reforms. The retirement fund commutation threshold has been raised to N$375,000, providing relief for seniors, while housing benefit caps are set at N$400,000 annually to ensure fairness. Corporate tax rates for non-mining firms will drop to 30% in 2025 and 28% in 2026, alongside measures to broaden the tax base, including a 10% dividend tax.
The VAT regime will be extended to digital services to level the playing field for local providers, while an e-invoicing system—set for rollout in April 2026—aims to curb fraud. A tax amnesty program, offering waivers on penalties for settled arrears, has been extended to October 2026. Excise duties on alcohol and tobacco have also risen by 6.75%, aligning with SACU agreements.
Addressing unemployment and climate risks
Minister Shafudah highlighted the urgency of tackling unemployment, particularly among youth, citing a conversation with an unemployed young man in Drimiopsis as a catalyst for empowerment programs. The budget allocates N$200 million for youth skills development and N$50 million for sports leagues to foster job creation.
Climate adaptation measures are also prioritized, given recurring droughts. The agriculture budget includes funding for drought-resistant crops and irrigation projects, while the Green Scheme program aims to enhance food systems.
A call for collective action
In her closing remarks, Minister Shafudah acknowledged the support of development partners during the 2024 drought emergency and reaffirmed Namibia’s commitment to fiscal sustainability. She praised collaborative efforts across government and urged Namibians to unite in achieving the budget’s goals.
“Together we achieve,” she declared, encapsulating the spirit of the 2025/26 budget—a blueprint for resilience and prosperity as Namibia looks beyond its 35th year of independence.
The success of this ambitious budget hinges on efficient implementation and global economic stability. With cautious optimism, Namibia strides forward, banking on revenue improvements and strategic investments to secure a prosperous future for all its citizens.