WINDHOEK, Feb. 8 (Xinhua) -- The decision to cut government spending has hurt Namibia's economy and businesses, President Hage Geingob said Thursday.
Addressing the first Cabinet meeting in Windhoek, Geingob said the decision to cut government spending was a difficult one to take since the country's independence in 1990.
Namibia resorted to budget cuts in 2016 when the economy slowed down.
Finance minister Calle Schlettwein had defended the budget cuts in July 2016 during the mid-term review, saying that the government had limited room to manoeuvre to survive the tough times in which both the global and local economies were finding themselves.
The budget cuts caused the government to delay paying for services and goods. Small companies that relied on the government closed down or scaled down operations.
The construction sector was the hardest hit after several projects were suspended and hundreds of workers sent home.
"To alleviate the plight of the construction and SME sectors, we resolved and paid all outstanding invoices for the fiscal year 2016/17 by the end of July last year," Geingob said.
Geingob, however, urged businesses to diversify as the government reflects on how to ensure a diverse and inclusive growth model, based on fiscal prudence and sustainability to weather turbulent economic storms.
"We, therefore, need to ensure our economic fundamentals are resilient to weather future independent intervening variables successfully," Geingob said.
He added that the government would continue to safeguard the fiscal sovereignty through eliminating or at least reducing wasteful expenditure, avoiding expensive debt uptake and building a sufficient fiscal and reserve buffer.