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Rand weakness won’t impact Namibia’s Rand-denominated debt

by Kelvin Chiringa

Central bank governor, Iipumbu Shiimi, has said that the weakness in the South African Rand does not impact Namibia’s rand denominated debt because the exchange rate is fixed. 

“We have actually seen, after the downgrade, the rand strengthening. One of the channels where you’ll see some signs of stress is when the currency is weakening. But whether it’s going to have a serious impact on Namibian debt, I doubt.”

“Although the Namibian debt is in rand, the channel of stress would be the exchange rate but that is fixed. So we will still continue to pay in a currency where the link between the Namibian dollar and that currency is fixed, therefore debt does not become expensive,” he said. 

Government’s debt ceiling will likely continue to shoot up as the budget deficit is projected to be mainly funded through public debt.

Local brokerage firm, Simonis Storm Securities said it is worrisome that the debt growth level is projected to rise above the economic growth rate.

While debt in itself is not a negative aspect, however, experts have also voiced their concerns over the sustainability of how this debt is being used.

Meanwhile, Shiimi said political processes in South Africa will impact both countries’ economies either for the better or worse, and has urged that whatever the outcome from SA’s congress must be positive.

“South Africa is a significant trading partner for Namibia, and therefore Namibia would want to see stability in South Africa and would want to see that economy growing faster. We believe that congress should produce an outcome that is going to maintain stability in South Africa so that the two nations will continue to grow, and continue to create the necessary employment that we need in both economies,” he said. 

Namibia has also welcomed some semblance of growth in Angola which have been spurred by an uptick in oil prices. 

“The oil prices have recovered, if you compare where we were in the beginning of 2016, oil prices were hovering over about US$30 at some point, and went to US$25 a barrel. It’s now hovering in the region of about between US$60 and US$50 which is a significant difference from where we were at the beginning of 2015 and 2016,” said Shiimi. 

He said that will help to create more revenue for the Angolan government, and more foreign exchange for the economy, thereby supporting economic activities in Angola.

“I believe there are also some reforms that the Angolan government is undertaking that are also going to help boost economic activities.”

“But it’s still early days, we shouldn’t celebrate. We hope to see stronger growth in Angola so that again we can trade as before so that the two economies can benefit from these improved economic activities in Angola, they buy our goods, we buy some things from them,” said the governor.