Chart of the Week
Following the tabling of Namibia’s FY ‘25/26 Mid-Term Budget, it was revealed that the budget deficit this year has increased by just under N$3 billion as revenue projections were lowered, while expenditure for the year remains largely unchanged. In addition to the N$15.8 billoin deficit that must be funded, Government faces a range of other cash requirements for which money must be borrowed. This includes for the ‘redemption’ of domestic debt instruments (the GC25 and GI25), which are typically rolled into other debt as they mature, along with needing to raise cash for the settlement of the US$750 million Eurobond that took place in Oct ’25.
The foreign financing portion fell short of initial expectations, with the latest Borrowing Plan no longer indicating N$2 billion in funding from the African Development Bank, while ‘other foreign financing’ that was initially considered did not seem to materialise. Project-specific financing was reduced from N$2.3 billion to just N$1.3 billionn. Rather, about R6 billion was sourced from domestic banks (in rands), providing funding (about 40%) for the Eurobond redemption last month.
With the larger deficit and less foreign financing, the domestic borrowing requirement for this fiscal year ballooned from an already substantial N$21.2 billion to N$26.3 billion. This is a substantial reliance on the domestic market for funding, although by the end of Oct ‘25 about N$17.3 billion (or 65.7%) had already been raised. Nonetheless, the N$26.3 billion domestic borrowing requirement is the largest in the country’s history – nearly N$10 billion larger than the domestic borrowing requirement in FY ‘21/22 which was impacted by the COVID-19 pandemic and the first Eurobond redemption (US$500 milion). Deficits over the MTEF are projected to narrow somewhat, and as are the domestic borrowing requirements, but there remains risk that these will be larger than currently planned. Given the large reliance on the domestic market, it begs the question for how much longer this can be sustained.
*Robert McGregor is the head of research at Cirrus Capital.**
The foreign financing portion fell short of initial expectations, with the latest Borrowing Plan no longer indicating N$2 billion in funding from the African Development Bank, while ‘other foreign financing’ that was initially considered did not seem to materialise. Project-specific financing was reduced from N$2.3 billion to just N$1.3 billionn. Rather, about R6 billion was sourced from domestic banks (in rands), providing funding (about 40%) for the Eurobond redemption last month.
With the larger deficit and less foreign financing, the domestic borrowing requirement for this fiscal year ballooned from an already substantial N$21.2 billion to N$26.3 billion. This is a substantial reliance on the domestic market for funding, although by the end of Oct ‘25 about N$17.3 billion (or 65.7%) had already been raised. Nonetheless, the N$26.3 billion domestic borrowing requirement is the largest in the country’s history – nearly N$10 billion larger than the domestic borrowing requirement in FY ‘21/22 which was impacted by the COVID-19 pandemic and the first Eurobond redemption (US$500 milion). Deficits over the MTEF are projected to narrow somewhat, and as are the domestic borrowing requirements, but there remains risk that these will be larger than currently planned. Given the large reliance on the domestic market, it begs the question for how much longer this can be sustained.
*Robert McGregor is the head of research at Cirrus Capital.**
