FMD response, airline plan threaten development budget
Namibia’s development budget faces mounting pressure from the cost of responding to foot-and-mouth disease (FMD) and plans to launch a new national airline, with the two initiatives potentially accounting for nearly a quarter of available funding, according to Cirrus Capital.
In its Fiscal Year 2026/27 Mid-Year Budget Primer, the research firm estimates that the FMD response could add N$934.9 million in development spending during the second half of the financial year. The planned Namibia Air fleet, meanwhile, is valued at about N$594 million, although funding has yet to be allocated.
“If both fall under the development budget, they will absorb about 23% of it (14% for the FMD response alone),” Cirrus said.
The projections come as the government’s development budget for the 2026/27 financial year is estimated at N$6.58 billion, down by about 25% from N$8.81 billion in the previous financial year.
Cirrus said allocations had been guided by the implementation capacity of ongoing projects, with priorities including education, urban and rural development, housing, informal settlement upgrades and defence.
Pressure on development spending
The potential cost of the FMD response adds to the challenge of financing development priorities within a constrained budget.
Cirrus said the majority of the disease response would fall under development spending, where it expects under-execution during the first half of the financial year.
This could allow the government to redirect money from projects that are progressing slowly towards urgent expenditure requirements.
“The development budget has increasingly served as a pseudo-overdraft facility for operational spending,” Cirrus said.
The firm noted that the previous two mid-year budget reviews had involved reallocating N$746.3 million and N$826.4 million, respectively, out of the development budget.
Cirrus also expects that funding additional operational expenditure pressures would depend on a similar pattern of underspending on development projects.
The approach could help the government meet immediate spending obligations without increasing expenditure by the full amount of the additional pressures. However, it also raises questions about the funding available for capital projects and the pace at which they can be implemented.
Veterinary services allocation cut
The budget pressure comes as the development allocation for Veterinary Services has been reduced.
Cirrus put the allocation at N$107.6 million for 2026/27, down from N$147.5 million in the previous financial year.
The projected N$934.9 million FMD response is substantially larger than that allocation, although the overall response may involve expenditure across government and should not be treated as a Veterinary Services budget alone.
The outbreak and the planned airline fleet also form part of wider pressures on public finances.
Cirrus estimates that the inflation gap and potential FMD response could add about N$1.79 billion, or 2%, to non-interest spending. If Namibia Air also becomes a direct burden on the fiscus, this could rise to N$2.38 billion, although the firm excludes the airline from its base estimate.
Before reallocations, Cirrus estimates that the revenue shortfall and additional spending pressures could push interest expenditure to about N$16.5 billion and total expenditure to N$108.8 billion.
After accounting for N$696 million in grant-funded expenditure and reallocations from development spending, the firm estimates total expenditure at N$106.4 billion.
