Effects of Government Expenditure on Foreign Exchange Reserves: Evidence for Namibia

The study empirically investigated the effects of government expenditure on FX reserves in Namibia. Using quarterly data, applied Autoregressive Distributed Lag (ARDL) cointegration technique to examine relationship between and expenditure, exchange rate, external borrowing, current account balance M2 over period ranging from 2002 2020. results show that an increase reduces reserves. Furthermore, foreign debt, increases level reserves, while appreciation effective rate study, therefore, concludes high borrowing impacts These findings suggest developments may hinder monetary policy effectiveness. Based these findings, recommends continuation fiscal consolidation reduce deficits debt. Similarly, it is important ensure macroeconomic appropriate coordination policies.