The United Nations has urged emerging economies such as Namibia to recalibrate their policies and economic activities by diversifying sources of revenue so as to better withstand shocks.
This is contained in a policy brief (“COVID-19: An emerging Development Challenge, but an opportunity for the Sustainable Development Goals (SDGs)) by the UN System in Namibia through resident economist Eunice Ajambo.
With tourism receipts at rock bottom, commodity prices tumbling and COVID-19 suppressing economic output, emerging economies face a difficult path to economic recovery, but a range of interventions could mitigate these negatives.
The brief says, “Even if developing countries manage to avoid a full-blown debt crisis, some may need to monetise their debt, that is, print money to finance additional fiscal outlays to fight the pandemic.
Unlike in developed economies, domestic capital markets are shallow in most developing countries, making it harder for governments to borrow without crowding out private borrowing.”
The brief warns against excessive domestic government borrowing and debt monetisation, saying these would increase inflationary pressure and depress growth.
It, however, says countries like Namibia can diversifying sources of revenue through economic diversification via beneficiation and developing the natural resources value-chain, alongside human capital development and enhanced economic governance.
The brief says this will make Namibia resilient to a wide range of economic shocks, while also deepening national capital markets and promoting access to financial services for under-served areas and sectors with potential for sustainable growth.