Fitch affirms Nam’s junk status

Jo-Maré Duddy – Fitch Ratings has affirmed government’s debt in foreign currencies, excluding the rand, at two notches below investment status. The agency also affirmed Namibia’s negative outlook.
This is in contrast to Moody’s, which downgraded Namibia to three rungs below investment status over the weekend.
Affirming government’s rating at BB- on Monday night, Fitch said general government debt will rise to 70% of gross domestic product (GDP) at the end of March 2021 and further to 76% in 2022/23.
This is “much higher” than the forecast BB median of 60% of GDP in 2020 under its baseline, Fitch said.
In 2019/20, government’s debt was 56% of GDP.
Namibia’s negative outlook reflects increased downward pressures on creditworthiness due to a continued rise in general government debt driven by persistent wide fiscal deficits and a protracted recession aggravated by the coronavirus pandemic shock, Fitch said. It also reflects challenges to fiscal consolidation from a difficult social context marked by a particularly high level of inequality, it added.
“The rising debt trajectory reflects that given the weak macroeconomic conditions since the end of the mining and credit boom in 2016, the results of consolidation efforts have been partly offset by its negative impact on growth and revenues,” Fitch said.
In addition, “the acceleration in the debt trajectory reflects the severe impact of the pandemic shock on public finances and the Namibian economy”.