Namibia’s debt indicators deteriorating

PHILLEPUS UUSIKUThe central government’s budget deficit is estimated to widen considerably during the 2020/21 financial year (FY), compared to the preceding fiscal year.Central government’s deficit for FY2020/21 was estimated in the May 2020 budget to rise to 12.4% of GDP, much higher compared to the previous fiscal year, this is according to Bank of Namibia (BoN) quarterly bulletin report.The Bank of Namibia (BoN) as one of its functions exist to provide economic advice to the government including debt related matters. The rise in government’s budget deficit is the highest level ever registered since independence. The increase is expected to be on account of governments’ effort to cushion the effect of the Covid-19 pandemic on economic activity as well as to help save lives and to support livelihoods through the provision of social grants and the procurement of various health materials and equipment, BoN says.Revenue collection is estimated to decline during the period under review, as a result of subdued economic activity and accelerated payment of VAT refunds, BoN added.BorrowingGenerally, governments have various developmental and national objectives, and they can be successfully achieved if the state has sufficient revenue to invest in certain strategic untapped sectors.If the funds are not sufficient however, the government has to seek to secure additional funds to finance rendering of basic services by spending the available scarce revenue in the most efficient and effective way to ensure growth in all sectors of the economy.The government debt stock rose year-on-year and quarter-on-quarter during the first quarter of FY2020/21, compared to the corresponding period in the previous fiscal year on account of an increase in domestic and foreign borrowing. The total government debt stock stood at N$101.2 billion at the end of June 2020, representing an increase of 15.1% and 0.8% year-on-year and quarter-on-quarter, respectively, compared to the debt stock registered at the end of June 2019, BoN pointed out.The yearly increase was reflected in both domestic and external debt as a result of further allotments of treasury bills (TBs) and Internal Registered Stock (IRS) in order to finance the budget deficit. Furthermore, the quarter-on-quarter increase in total government debt was mainly driven by a rise in domestic debt, while external debt declined, mainly owing to the redemption of a JSE listed bond. Total debt as a percentage of GDP stood at 58.7 percent during the period under review, reflecting an increase of 10.1 percentage points over its level at the end of June 2019, BoN says. The debt-to-GDP ratio continued to rise further above the government debt ceiling of 35.0 percent of GDP, edging closer to the SADC convergence limit of 60.0%.Debt servicingGovernment debt service rose on a yearly basis during the first quarter of the FY2020/21, while on a quarterly basis debt service rose owing partly to coupon payments of both eurobonds. A eurobond is a debt instrument that is denominated in a currency other than the home currency of the country or market in which it is issued.Total government debt service rose significantly by 58.9% to N$2.1 billion year-on-year during the quarter under review. This was reflected in external debt services, owing to the principal repayments of the JSE listed bond, during the quarter under review. On a quarterly basis, government debt service rose significantly to N$2.1 billion from N$624 million, mainly due to the scheduled coupon payments of the eurobonds, coupled with the interest and principal repayment of one of the JSE listed bonds during the quarter under review. As a result, total debt service as a percentage of revenue rose by 2.0 percentage points to 2.4%. -pkuusiku@gmail.com

Namibia’s debt indicators deteriorating

Kommentaar

Republikein 2026-06-26

Meld asseblief aan om kommentaar te lewer

Namibia’s debt indicators deteriorating

Kommentaar

Republikein 2026-06-26

Meld asseblief aan om kommentaar te lewer

Intekening vereis om toegang tot inhoud te kry. ×

MELD AAN

Advertensie

Intekening vereis om toegang tot inhoud te kry.