Namibia set sights on reducing sovereign debt
By Timo Shihepo
Windhoek – Namibia’s finance minister, Calle Schlettwein said that plans are in place to reduce the country’s sovereign debt of 41.9 percent to 30 percent in the coming years.
Information provide to The Southern Times by the finance ministry, last week, states that Namibia’s sovereign debt stands at 41.9 percent, which translates to more than R20 billion. The country’s sovereign debt is owned by a mixture of bilateral debts and multinational debts.
Some of the bilateral loans include that from China, France, Germany and European bank. The multinational debt includes that from Organisation of the Petroleum Exporting Countries (OPEC), African Development Bank (AfDB) and Kuwait amongst others.
The southern African nation has also taken out some small loans that add to the debt but the main one is from AfDB co-funded by OPEC.
The AfDB loan is worth R10 billion and government is expected to receive R3 billion this year and another R3 billion next year. The other R4 billion is subject to approval from AFDB board of directors.
The R3 billion is to finance the 2017/2018 budget deficit whiles the R4 billion is earmarked for infrastructure projects.
Other huge loan is owed to China totaling over R2 billion.
Namibia’s economy is going through a rough patch and it’s almost begging the country to take out international loans. In 2016, Namibia recorded a sharp slow-down in real gross domestic product (GDP) from 5.3% in 2015 to 0.2%.
As a share of Gross Domestic Product (GDP), the fiscal deficit at 8.3%, the current account deficit at 13.7%, and public sector debt at 39.8%, had also markedly increased, while international reserves at 2.8 months of imports were below the international benchmark of three months.
Despite these concerning numbers, Schlettwein however said that government is not looking at taking out further international loans. He said that it is pleasing to see that the country’s economy is starting to recover and it’s currently in the recovery phase.
“We do not have any loans from the World Bank or the International Monetary Fund and we do not intent to take loans from these organisations at the moment. We are in the consolidation phase where our economic fundamentals are aligned to our expected income. We are hoping this will decrease our sovereign debt of 41.9% to the target of 35% and eventually to 30% in the coming years,” he said.
Schlettwein added that Namibia has done really well given the fact that its economy is small, open and too fragile to external factors. He added that whatever is to be done today must result in economic spinoffs for the future generation.
The country has formulated what’s known as Namibia Economic Governance and Competitiveness Support Programme (EGCSP). The EGCSP is designed to address emerging vulnerabilities undermining macroeconomic stability and support the Government’s ongoing bold structural reforms aimed at driving long-term job creating growth and reducing income equality.
The programme will support the strengthening of public financial management and improve the quality and efficiency of public sector spending, while laying a solid foundation for industrialization through support to critical business environment reforms.
“Sustainable economic development must result in children being better off than their parents. A challenge in boom-bust economic cycles,” said Schlettwein.