Namibia’s debt increases by N$1.15bn

Namibia’s public debt stock increased by N$1.15 billion, according to Simonis Storm, on account of the issuance of short-term debt instruments.

“Namibia's total domestic debt increased by N$1.15 billion in August, rising from N$120.32 billion to N$121.47 billion. This increase was driven by positive net issuance across various government debt instruments. Internal Registered Stock rose by N$742.31 million, inflation-linked bonds increased by N$80 million and Treasury Bills expanded by N$327.75 million,” the company said in its fixed income report for September.

Simonis Storm lauded a recent decision by the Bank of Namibia (BoN) to reduce lending rates, saying it was providing relief to stressed households. “With borrowing costs remaining relatively high, this recent rate cut is expected to provide some relief to households, particularly as private sector credit extension has been sluggish. Looking ahead, there is potential for another rate cut in Namibia before the end of the year,” it said.

Simonis Storm noted that it expected the South African Reserve Bank to hike its rates, owing to a widened rate differential between Namibia and that country. “The recent adjustment has widened the interest rate differential between Namibia and South Africa to 75 basis points, yet we anticipate that South Africa may also implement a rate reduction in response to similar economic pressures,” it said.

With regards to the introduction of retail bonds by the BoN, Simonis Storm said it would help broaden financial inclusion to allow ordinary Namibians more participation, particularly for low and middle-income earners.

“In a move to enhance financial inclusion, the BoN plans to introduce retail bonds aimed at low and middle-income earners. Currently, the minimum investment amount for fixed-rate bonds is N$50 000, with increments of N$10 000, which can be prohibitive for some investors," it said. “This new initiative will offer more accessible savings options with potentially higher yields than traditional savings accounts. Further details regarding the terms and conditions of this project will be released upon its finalisation."