Maihapa Ndjavera

Namibia’s external debt stock declined by 4.1% to N$31 billion at the end of 2019. This was confirmed by the central bank in its latest annual year report for 2019.
The report stated the decline was attributed to revaluation changes arising from the appreciation of the local currency against major trading currencies, particularly the US dollar and the RMB (China currency). 
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.
Meanwhile, the report continued that external debt as a ratio to GDP declined from 18% in 2018 to 17% in 2019. 
“External debt servicing rose to N$2.4 billion during the year under review, from N$2.2 billion in 2018. As a percentage of total revenue, external debt servicing rose by 0.1 percentage points to 4.0%,” it reported.
The report also revealed the central government’s debt stock rose over the year to the end of 2019 on account of increased domestic borrowing. Total government debt stock stood at N$93.2 billion at the end of 2019, representing an increase of 7.5% over the debt stock registered at the end of 2018. 
“The increase was mostly reflected in domestic debt as a result of the further allotments of treasury bills (TBs) and interest rate swaps (IRS) in order to finance the budget deficit. Meanwhile, external debt declined by 4.1%, owing to the exchange rate appreciation of the local currency against major trading currencies, particularly the USD and the RMB. Total debt as a percentage of GDP stood at 51.2% at the end of 2019, reflecting an increase of 2.6 percentage points over its level at the end of 2018. The debt-to-GDP ratio remains higher than the central government debt ceiling of 35% of GDP,” reads the report. 
Regarding domestic debt, the bank said this rose both on an annual and quarterly basis during the quarter under review, as mirrored in the allotments for TBs and IRS. 
The government’s total domestic debt rose by 14.3% to N$62.3 billion at the end of 2019. The increase was reflected in both treasury bills and Interest rate swaps.  TBs and IRS, which rose by 11.3% and 16.4%, respectively, on account of increased borrowing to meet the government’s financing requirements. Most of the TBs were allotted to the banking sector, while the IRS was mainly allotted to non-banking financial institutions. As a percentage of GDP, domestic debt rose by 3.7 percentage points, to 34.2% at the end of 2019. 
Deputy governor of the central bank Ebson Uanguta said during 2019, the stock of international reserves held by the central bank decreased. It declined by 6.7% over the year to N$28.9 billion at the end of December 2019. 
“The reduction in foreign reserves was partly driven by higher government foreign payments during 2019, coupled with net sales of rand to commercial banks by BON. The reserves were estimates to cover 4.1 months of the country’s imports for goods and services for the year, which was slightly lower than the 4.5 months recorded at the end of 2018,” said Uanguta. 
– mndjavera@nepc.com.na