Speaking at the annual Economic Breakfast Budget Review hosted by FirstRand Namibia, Abigail Nainda, Deputy Director of Policy Research and Analysis at the Bank of Namibia, assured the public that the country’s foreign reserves remain strong despite the recent repayment of the second Eurobond.
Nainda was responding to a question from the moderator about how Namibia could build stronger macro-economic buffers to reduce dependence on both the Southern African Customs Union (SACU) revenues and volatile commodity prices.
She explained that while the Eurobond redemption reduced the country’s reserve levels by several billion dollars, Namibia remains in a healthy position.
“Our reserves, following that redemption, are at N$47 billion, which is still within the standard international level. As a central bank, we do get concerned when we see declines, but there are ongoing plans to enhance our reserves,” she said.
She shared that the Bank of Namibia is in the process of purchasing gold locally as part of a broader strategy to strengthen reserve holdings. This move, she added, will not negatively affect the current reserve levels.
Additionally, the central bank is exploring swap arrangements with other banks to further boost reserve assets.
“By the end of December 2025, we expect our reserves to rise again to more comfortable levels. This will help maintain confidence in our ability to pay for essential imports and manage external shocks,” she said.
Foreign exchange reserves are the foreign currencies held by a country’s central bank or monetary authority.
These reserves are used to back the country’s domestic currency and ensure the government has enough foreign currency to pay for international transactions, such as imports or debt repayments.
Her remarks come after finance minister Ericah Shafudah announced on Wednesday that Namibia had successfully redeemed its second Eurobond, valued at US$750 million the largest single debt repayment in the nation’s history.
Namibia’s first Eurobond, issued in 2011, amounted to US$500 million (around N$7.5 billion) at an interest rate of 5.5%.
Those funds were used to support key projects, including housing development.
That first Eurobond was fully paid off in November 2021.
By supporting initiatives such as expanding road networks and energy infrastructure, along with investing in education and healthcare, the second Eurobond helped lay the foundation for a more connected, productive and equitable Namibia.
In 2015, Namibia borrowed again by issuing a US$750 million bond at a slightly lower interest rate of 5.25%.
This bond has now been fully repaid.
Shafudah explained that ‘redeeming’ a bond means repaying borrowed money raised from investors on the international market.
The Bank of Namibia’s governor Johannes !Gawaxab on Wednesday at the redemption of the Eurobond said, confirmed the country’s international reserves will remain at more than three months’ import cover, which is sufficient to maintain the one-to-one peg with the South African Rand.
The Minister of Finance, Ericah Shafudah, said at the FirstRand Namibia midterm budget review that the budget was revised during a period of significant global, regional and domestic economic pressure. She noted that despite the tight fiscal environment, government spending has been reassessed to maintain a balance between supporting growth and meeting urgent needs.
“We still have left money for spending on capital projects whereas we also must reallocate few dollars or some dollars to agent needs. For example, we need to make sure that our health and education sectors are well capitalised, and this is what exactly what we did.
So, it is the balancing of spending, smart spending and taking care of the initiatives that have to do with growing the economy going forward,” she said.
When the minister tabled the N$89.4 billion midterm budget early this month reiterated that governments are encouraged to adopt a more strategic approach to spending, focusing on enhancing efficiency rather than simply increasing budgets in response to rising global public debt and fiscal challenges. by redirecting funds towards growth enhancing sectors such as education and infrastructure, it is possible to foster sustainable growth.
-pmukokobi@nepc.com.na