MoF, BoN hits back on default risk index

While vulnerabilities exist, the Ministry of Finance (MoF), Bank of Namibia (BoN) and a local independent analyst do not agree that Namibia is at risk to default on their debt obligations in 2022.The Sovereign Debt Vulnerability Index ranked Namibia 10th out of 25 countries, with government debt expected to reach 69.7% of the country’s overall output.Other indicators included government bond yield (9.4%), Credit Default Swap (CDS) Spread (593 basis points) and interest expense as percentage of gross domestic product (4.2%).“We find the methodology utilized by the author to rank the countries incoherent and misleading. It is also unclear to us the weights applied to each indicator, and subsequently the impact of each indicator on the ultimate country ranking in the index,” the ministry of finance said in a statement.“We therefore do not concur that Namibia is one of the countries ranked high on default risk in 2022. We continue to invest in strengthening our domestic resource mobilization capacity while entrenching fiscal and structural reforms. We believe that the combination of such measures will improve our fiscal position and thus improve our debt servicing capacity,” the ministry added.Meanwhile, the governor of the central bank Johannes !Gawaxab also shared the same sentiments as the Ministry of Finance at a stakeholder engagement in Rundu yesterday.According to !Gawaxab, the rating does not factor in oil prospects nor green potential as these are serious game changers for Namibia. The rating agency ignored positive prospects of in diamond revenue by Namdeb Diamond Corporation.In addition, they did not factor in successive series of external shocks, drought, Covid-19 pandemic and geopolitics, !Gawaxab said.Contacted for comment, local independent analyst Josef Sheehama is also of the view that Namibia will not default. Rising borrowing prices, inflation, and debt are all fuel concerns of an economic collapse. “We know that borrowing makes sense for rich and poor, if it finances projects such as schools, hospitals, and physical and digital infrastructure. These are smart investments that can boost potential growth and improve the economic wellbeing of all Namibians. Therefore, more job creation means more government revenue increase, and can use portion to finance its debt,” he said.Developing new policies and sharing fresh ideas can help move the sovereign debt needle in the right direction. Implementing flexible industrial and trade policy to promote competitiveness and facilitate long-run growth should continue to be a strategic policy focus area, he said. -phillep@nmh.com.na

MoF, BoN hits back on default risk index

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Republikein 2025-11-04

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MoF, BoN hits back on default risk index

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Republikein 2025-11-04

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