Government cash crunch deepens post-Eurobond payoff
The government’s cash flow position is expected to remain under pressure in the short- to medium-term following the successful redemption of its US$750 million (approximately N$13 billion) Eurobond issued in 2015, FNB Namibia economist Cheryl Emvula said.
This is also expected to place pressure on the banking sector’s liquidity position. The Eurobond repayment was predominantly financed domestically, with US$444 million sourced from a central bank-managed sinking fund and US$306 million raised from local lenders, including Standard Bank Namibia, First National Bank Namibia, and Bank Windhoek in partnership with Absa.
By absorbing a significant amount of local capital, the domestic financing component reduces the pool of funds available for lending within the commercial banking system, thereby affecting liquidity.
“The government’s net financial position stood at N$8.1 billion in September, slightly below the N$8.3 billion recorded in August. This position will face significant strain with the redemption of the US$750 million Eurobond in October, which likely alleviated pressure on both fiscal liquidity and overall banking sector liquidity over the past few months. Nonetheless, other risks to fiscal stability persist,” Emvula said.
Adding to the government’s short- to medium-term fiscal challenges is a shortfall in revenue, which the Ministry of Finance placed at N$3.2 billion in the recently delivered mid-term budget review tabled by finance minister Ericah Shafudah.
“Potential revenue shortfalls, such as the observed N$3.2 billion shortfall in the mid-term budget review for the 2025/26 fiscal year, or unexpected increases in debt-servicing expenditure, could exert pressure on government financing in the short- to medium-term,” Shafudah said following the delivery of the mid-term budget review.
Earlier this year, the Bank of Namibia projected that the country would face a decline in Southern African Customs Union (SACU) revenue from N$28 billion in 2024 to N$21 billion in 2025.
This is also expected to place pressure on the banking sector’s liquidity position. The Eurobond repayment was predominantly financed domestically, with US$444 million sourced from a central bank-managed sinking fund and US$306 million raised from local lenders, including Standard Bank Namibia, First National Bank Namibia, and Bank Windhoek in partnership with Absa.
By absorbing a significant amount of local capital, the domestic financing component reduces the pool of funds available for lending within the commercial banking system, thereby affecting liquidity.
“The government’s net financial position stood at N$8.1 billion in September, slightly below the N$8.3 billion recorded in August. This position will face significant strain with the redemption of the US$750 million Eurobond in October, which likely alleviated pressure on both fiscal liquidity and overall banking sector liquidity over the past few months. Nonetheless, other risks to fiscal stability persist,” Emvula said.
Adding to the government’s short- to medium-term fiscal challenges is a shortfall in revenue, which the Ministry of Finance placed at N$3.2 billion in the recently delivered mid-term budget review tabled by finance minister Ericah Shafudah.
“Potential revenue shortfalls, such as the observed N$3.2 billion shortfall in the mid-term budget review for the 2025/26 fiscal year, or unexpected increases in debt-servicing expenditure, could exert pressure on government financing in the short- to medium-term,” Shafudah said following the delivery of the mid-term budget review.
Earlier this year, the Bank of Namibia projected that the country would face a decline in Southern African Customs Union (SACU) revenue from N$28 billion in 2024 to N$21 billion in 2025.
