Namibia’s total external debt stock has declined both year-on-year (y-o-y) and quarter-on-quarter while the central government’s debt has risen on both bases, reports Bank of Namibia (BoN).
The latest BoN report shows on an annual basis, the total outstanding debt stock declined by 0.8% to N$32.5b while on a quarterly basis, the total external debt declined by 24.5%, mainly due to notable repayments observed in the debt of the private sector as a result of the conversion of debt to equity.
On the other hand, the central government’s external debt stock rose yearly and quarterly due to increased bilateral loans, the issuance of the Johannesburg Stock Exchange (JSE) listed bond and the weak exchange rates.
On an annual basis, the total outstanding external debt of the Government rose by 30.5% to N$10.5b due to the issuance of the JSE listed bond issued during the fourth quarter of 2012. This was further affected by the rise in bilateral loans and the depreciation of the local currency against the US dollar and the Euro.
As presented by Simonis Storm Securities (SSS)’s economist Daniel Kavishe, overall, the total Namibian government debt has grown steadily since August by an estimated N$300m each month.
“Total Government debt grew to N$29.1b in November, a 29.1% growth, y-o-y. Government continues to reduce the proportion of its domestic short-term paper (TB’s) as longer term Internal Registered Stock (IRS) bonds remain favourable. Currently, TBs account for 43.33% of the total domestic debt issued while the IRSs account for the remaining 56.66%.”
Furthermore, the total Namibian debt (domestic, foreign government, corporate and household debts) at the end of November stood at N$87.3b from N$77.69b a year ago.
While the BoN report notes the private sector’s share of total debt declined by 11.9% annually, it remains the largest external indebted sector with external debt balance standing at N$18.9b at the end of the third quarter of 2013, representing a 58.2% share of the total external debt. However, the central government and the parastatals hold the remaining portion of 32.4% and 8.5%, respectively.
According to the SSS figures, though, credit extended to the private sector grew to N$58.6b in November. However, the annual growth in credit extension remained moderate with growth attributed mostly to other loans, advances and instalment groups.
Notably, the international reserve stock held by BoN declined on a quarterly basis due to increased commercial bank purchases of the rand but rose on an annual basis mainly as a result of valuation adjustments from the weak local currency. The stock of international reserves declined by 9.7% at the end of the second quarter of 2013. The weeks of import cover decreased to 9.19 during the third quarter from 14.35 weeks while the international reserve increased by 6.7% on an annual basis, compared to the same period of the corresponding quarter in 2012, as a result of the depreciating local currency.