WINDHOEK - Namibia’s external debt stock rose by 13 percent annually to N$32.4 billion at the end of the second quarter of the 2019/20 financial year, Bank of Namibia governor Ipumbu Shiimi said.
Shiimi said the rise was mainly driven by the N$3 billion disbursement of the second tranche of a loan from the African Development Bank (AfDB), coupled with exchange rate depreciation against major international currencies.
AfDB in 2018 approved the second tranche budget support loan of N$3 billion for Namibia.
The total loan package consists of N$10 billion, of which N$6 billion is budget support (2017/18 and 2018/19) and N$4 billion for project financing over a five-year period. Government applied for the loan at the beginning of 2017.
According to local economic analyst, Klaus Schade, the country’s level of external debt depends on how the debt was used.
“If the external debt was used for consumption then it is not very good. However, if it was used for infrastructure development, then it is good because of the return on investment,” said Schade. He added an assessment before the infrastructure development would normally indicate the potential return on the investment.
Meanwhile, Shiimi in the BoN’s latest quarterly bulletin said “on a quarterly basis, central government external debt rose by 4.2 percent during the period under review, mainly due to the depreciation of the local currency against mainly the US Dollar”.
As a percentage of GDP, Shiimi said external debt rose both year-on-year and quarter-on-quarter by 1.4 percentage points and 0.7 percentage point, respectively, to 16.4 percent.
“External debt service rose by 24.3 percent to N$484 million, during the quarter under review. As a percentage of revenue, external debt service rose slightly to 0.8 percent during the quarter under review from 0.7 percent during the corresponding quarter in the previous fiscal year,” he said.
Shiimi also said in the report the central government’s debt stock rose both on a yearly and quarterly basis during the second quarter of the 2019/2020 financial year.
He said during the same time, government debt stock stood at N$91.4 billion at the end of September 2019, representing yearly and quarterly increases of 13.4 percent and 4.0 percent, respectively.
“The yearly and quarterly increases were reflected in both domestic and foreign loans as a result of issuance of both Treasury Bills (TBs) and Internal Registered Stock (IRS), as well as the disbursement of the second tranche of the African Development Bank (AfDB) loan,” he said.
According to him, most of the TBs were allotted to the banking sector, while the IRS were allotted to the non-banking financial institutions.
“Total debt as a percentage of GDP stood at 49.3 percent at the end of September 2019, representing a yearly and quarterly increase of 4.1 percentage points and 1.9 percentage points respectively,” he said, adding that the ratio of debt to GDP remained above the central government debt ceiling of 35 percent of GDP.
On domestic debt, Shiimi said the total domestic debt rose both on a yearly and quarterly basis during the quarter under review, as mirrored in the allotments for TBs and IRS.
He said government’s total domestic debt increased, both yearly and quarterly, by 13.7 percent and 4.0 percent, respectively, to N$59.0 billion at the end of the second quarter of this financial year.
He said the yearly increase was reflected in both the TBs and IRS, which rose by 8.5 percent and 17.2 percent, respectively, during the period under review.
According to him this was attributed to the borrowing requirements to finance the central government budget deficit during the period under review.
Furthermore, he said on a quarterly basis, TBs and IRS rose by 4.0 percent and 3.9 percent, respectively.
“As a percentage of GDP, domestic debt increased both year-on-year and quarter-on-quarter by 2.7 percentage points and 1.2 percentage points, respectively, to 29.8 percent,” said the governor.
2020-01-23 07:30:10 | 5 months ago