, however, the recovery in the growth of the economy in the medium term will be that of a balanced, diversified growth as both the mining and non - mining sectors are expanding. economic prospects for the next five years are particularly positive as gdp is projected to grow on average at a rate slightly below 5 % per year between 2001 and 2005. for the ensuing five years beyond 2005, growth is expected to fall to an average of around 4 %. the balance of trade deficit is forecast to deteriorate during the first half of the decade as the terms of trade will continue to deteriorate. this is further compounded by the envisaged reduction in sacu revenue. consequently, the current account of the balance of payments will become negative for the first time since data were recorded. the current account deficit, together with persistent capital outflows, yield a balance of payment shortfall for the large part of the forecasting period, implying that the internal reserves of the country will be falling. at the end of 1999, the level of reserves was equal to an import coverage of 8. 3 weeks. it should be the authorities ’ objective over the next ten years to increase this coverage. chart balance of payments projections 2000 - 10 f or e cas t s ( 2000 - 2010 ) • b alance of payme nt s - 1 - 2 - 3 - 4 - 5 cu rre n t a c c % g dp - 6 o v e r a ll b o p b a la n c e % g d p public finance public finance projections are based on the assumption that the budget deficit for the next ten years remains at a level of not more than 4 % in relation to gdp. revenue from mining is expected to rise in the first half of the decade, but this positive trend is likely to be offset by the declining sacu receipts. although the magnitude of the fall is still being investigated, preliminary evidence suggests that revenue from this source could shrink by as much as 15 % over the next ten years. government expenditure is forecast to remain stable at the level witnessed during the past two years. chart budget deficit forecast growth 2000 - 10 f or e cas t s ( 2000 - 2010 ) • b udge t de f icit deficit as % of gdp - 1 - 2 - 3 - 4 - 5 - 6 - 7 actual 1990 / 91 actual 1992 / 93 actual 1994 / 95 actual 1996 / 97 actual 1998 / 99 forecast forecast forecast forecast forecast forecast the consequence is

the question is what namibia can do to bring the economy on a path of sustainable and healthy growth. as i have already emphasised the point, investments in physical and human capital must continue. however, it is far from obvious that high initial investments and savings are sufficient preconditions for growth. the relatively high saving ratio in namibia has not been transformed into high investment and growth. as mentioned, one important explanation has been low and declining factor productivity in the economy. public investment will remain important, but investment opportunities must also be made available to the private sector. although our present knowledge strongly indicates that investment is probably the factor closest correlated with growth, it is crucial to identify other relevant factors that will trigger investment and growth in namibia. advances in production efficiencies and technology are such important factors, but so is the complicated interplay between economic and political factors. let me start with sound macroeconomic policies. sound macroeconomic policies basically mean a sustainable fiscal balance and a supportive monetary policy. the pressure on the public finances has been growing in recent years and the budget deficit has been edging up and public debt has increased as a result. among the new challenges that will affect the budget, is the reduced sacu receipts over the next few years. as our fiscal policymakers are aware, bold measures are needed to make sure public finances are put on a sustainable path over the medium term. these will include reduced expenditure on recurrent expenditures, especially on personnel costs, and a broadening of the tax base. this should not increase the general tax burden, but rather contribute towards its reduction. the announced review of the tax system and the introduction of a medium term budgetary framework will undoubtedly contribute to a more efficient tax system and strengthened expenditure control. turning briefly to monetary policy, we believe that the peg of the namibia dollar to the rand and our membership in the common monetary area ( cma ) have contributed to securing broad financial stability. our objective is to expand the role of the cma in the direction of a true regional monetary union. recent initiatives have strengthened the role of the smaller members in information exchange and in providing input into the monetary policy making process in the cma. also within the domain of the central bank is our payment system reform project, which is aimed at establishing an automated payments system that is able to link up with regional and global systems. this would facilitate foreign trade and make monetary policy and supervision more effective. the bank is also committed to the steady liberalisation of exchange controls