Namibia’s public debt position has shown a short-term improvement after the redemption of the country’s Eurobond and partial repayment of the International Monetary Fund’s Rapid Financing Instrument.
However, economists warn that the pressure on government finances remains high.
In its latest budget review, First National Bank Namibia economist Cheryl Emvula stated that the country’s debt-to-GDP ratio is expected to decrease slightly from 67.3% in the 2024/25 financial year to approximately 66.1% in 2025/26.
But the bank warned that the improvement could be temporary. Actual economic growth appears to be slower than government projections, which means the debt ratio could rise again.
“Recent data indicate that nominal GDP is tracking below the Treasury’s baseline. This means the debt ratio could be higher in practice and may drift above 70% under more moderate growth outcomes,” he said.
Total government debt is expected to keep rising in the coming years. It is forecasted to hit approximately N$193.4 billion in the 2026/27 financial year.
Inte re st payments are increasingly straining public finances. Government is projected to spend N$14.3 billion on interest payments in 2025/26. This is expected to rise to around N$16.2 billion in 2026/27, accounting for approximately 18% of government revenue.
This leaves less money available for development projects and social programmes.
Government borrowing needs are also increasing. The gross borrowing requirement is projected to rise from N$12.5 billion in 2025/26 to approximately N$19.1 billion in 2026/27. Most of this money will be raised locally.
Nearly 90% of government funding is expected to come from the domestic market. Annual domestic borrowing has already risen to N$20.6 billion in 2025, significantly higher than levels seen before 2025.
Emvula stated that heavy reliance on local borrowing could increase interest rates as the government competes for funds within the domestic market.
“With financing needs expected to increase sharply, large issuances of Namibian interest-bearing paper are likely,” he said.
Despite the risks, Namibia’s overall debt profile remains sustainable, supported by its solid record of debt servicing and the fact that most borrowing is now conducted domestically.
He said careful fiscal management will be needed to keep debt under control as borrowing costs increase and economic growth remains uncertain.
During the tabling of the national budget earlier this year, Finance Minister Ericah Shafudah stated that government debt stood at N$174.5 billion as of January 2026, equivalent to 65.2% of gross domestic product.
She said the country’s debt portfolio now consists of 88% domestic debt and 12% foreign debt, reflecting a deliberate shift towards local financing.
However, interest costs continue to increase. According to the budget, interest payments are expected to rise from N$14.3 billion in 2025/26 to N$17.8 billion by the 2028/29 financial year.
Over the medium term, total government debt is expected to increase to about N$217.3 billion by 2028/29, with the debt-to-GDP ratio stabilising around 67.5%.
The government has introduced measures to strengthen debt management. The Ministry of Finance has started implementing the Commonwealth Meridian debt management system to improve transparency and efficiency in monitoring public debt.
Shafudah said the goal is to stabilise debt levels and gradually reduce the debt-to-GDP ratio towards the Southern African Development Community benchmark of 60%.
“At the same time, we are taking deliberate steps to reduce interest payments as a share of GDP and create fiscal space for development and social spending,” she said.
Economist Mally Likukela said the budget is generally considered a “pro-poor” tool, but it faces pressure from tight fiscal conditions and high debt servicing costs.
“Based on the 2026/27 Budget analysis, the national budgets show a high, though sometimes strained, responsiveness to social protection and poverty reduction, allocating over 40% of annual expenditures to the social sector,” he said.
-pmukokobi@nepc.com.na