Namibia’s finances hit peak, Eurobond looms
Ogone Tlhage
Namibia’s fiscal health has received a significant boost, with the country’s net financial position rising by N$1.1 billion to a three-year high of N$10.4 billion in July, the strongest level since October 2021. However, FNB Namibia economist Cheryl Emvula has warned that unexpected revenue dips and the looming N$750 million Eurobond repayment could threaten these gains if not carefully managed.
“While this continued improvement is a positive sign for the country’s fiscal health, it is important to acknowledge the risks that could quickly reverse these gains. Unexpected revenue shortfalls or a sudden rise in expenditure could place pressure on liquidity,” Emvula said.
The government is due to redeem the Eurobond next month, marking the single largest payment it will make in history. Emvula cautioned that the payment could tighten fiscal space if not carefully managed.
“This risk is particularly relevant given the upcoming redemption of the US$750 million Eurobond, which could constrain fiscal space if not carefully handled,” she said.
Meanwhile, the central bank’s director for financial markets, Nicholas Mukasa, noted that the government has set aside significant savings to cover the bond redemption.
“We have a debt management strategy that we are following. We have a sinking fund in place, savings allocated for the bond, and part of the domestic borrowing plan has been designed to raise the necessary funding. As far as the sinking fund is concerned, it is performing well,” Mukasa said.
The Bank of Namibia (BoN) previously stated that, in settling the remaining debt, the government plans to roll over all maturing domestic bonds in this fiscal year to create sufficient space for the Eurobond redemption.
“Furthermore, we plan to frontload borrowing in the first half of the financial year, aligned with the domestic debt-repayment profile through March 2026,” the ministry said.
The strategy prioritises domestic over foreign borrowing, as international spreads have widened and Namibia’s credit rating has deteriorated since issuing Eurobonds in 2011 and 2015. The approach is aimed at reducing exposure to exchange rate risks while stabilising the debt-to-GDP ratio.
Namibia’s fiscal health has received a significant boost, with the country’s net financial position rising by N$1.1 billion to a three-year high of N$10.4 billion in July, the strongest level since October 2021. However, FNB Namibia economist Cheryl Emvula has warned that unexpected revenue dips and the looming N$750 million Eurobond repayment could threaten these gains if not carefully managed.
“While this continued improvement is a positive sign for the country’s fiscal health, it is important to acknowledge the risks that could quickly reverse these gains. Unexpected revenue shortfalls or a sudden rise in expenditure could place pressure on liquidity,” Emvula said.
The government is due to redeem the Eurobond next month, marking the single largest payment it will make in history. Emvula cautioned that the payment could tighten fiscal space if not carefully managed.
“This risk is particularly relevant given the upcoming redemption of the US$750 million Eurobond, which could constrain fiscal space if not carefully handled,” she said.
Meanwhile, the central bank’s director for financial markets, Nicholas Mukasa, noted that the government has set aside significant savings to cover the bond redemption.
“We have a debt management strategy that we are following. We have a sinking fund in place, savings allocated for the bond, and part of the domestic borrowing plan has been designed to raise the necessary funding. As far as the sinking fund is concerned, it is performing well,” Mukasa said.
The Bank of Namibia (BoN) previously stated that, in settling the remaining debt, the government plans to roll over all maturing domestic bonds in this fiscal year to create sufficient space for the Eurobond redemption.
“Furthermore, we plan to frontload borrowing in the first half of the financial year, aligned with the domestic debt-repayment profile through March 2026,” the ministry said.
The strategy prioritises domestic over foreign borrowing, as international spreads have widened and Namibia’s credit rating has deteriorated since issuing Eurobonds in 2011 and 2015. The approach is aimed at reducing exposure to exchange rate risks while stabilising the debt-to-GDP ratio.
