Nghiinomenwa Hangala
According to the Bank of Namibia’s domestic debt security updates, domestic lenders have invested N$150.9 billion of their savings into the government to date, via bonds (fixed income and inflation-linked) and treasury bills, which are short term assets, as the country’s budget deficit continues to expand.
The central bank announced that the government’s domestic debt rose, month-on- month and year-on-year, at the end of February 2026.
The increase was reflected in both Internal Registered Stock (IRS) and Treasury Bills (TBs), which increased by 1.3% and 1.2% to N$103.1 billion and N$47.8 billion, respectively.
Year-on-year domestic debt rose by 17.7%, reflected in the issuance of both IRS and TBs, which rose by 19.2% and 14.2%, respectively.
Domestic debt as a percentage of GDP increased by 0.7 percentage points, month-on-month, to 54.1% during the period under review.
Similarly, on an annual basis, the ratio of domestic debt to GDP rose by 3.0 percentage points, as shown in the increased ratios of both IRS and TBs to GDP of 2.5 percentage points and 0.5 percentage points.
The fight for capital has, however, intensified with government borrowing more domestically, while entrepreneurs also seek capital to start and expand their businesses.
Now it is up to the owners of capital to choose where to put it, to expand the country’s private entrepreneurial ventures or lend it to the government to fulfil its budgetary commitment.
The trend is, however, expected to increase as the gap between government revenue and expenditure continues to grow.
To this effect, the government’s total financing requirement is projected to peak at N$19.2 billion in 2026/27, from N$14.5 billion estimated for FY2025/26.
If the government cools down on its social commitments and the economy grows, the deficit is expected to moderate to N$12.9 billion in FY2027/28 and N$10.6 billion in FY2028/29, respectively.
As this borrowing continues, the government is also expected to pay total interest payments that are projected to rise from N$14.3 billion in FY2025/26 to N$16.2 billion in FY2026/27, to N$17.1 billion in FY2027/28, and to N$17.8 billion in FY2028/29.
This applies to all domestic and external investors.
As a percentage of GDP, interest payments will average about 4.5%, while as a share of total revenue, they are expected to increase to 18.1% in FY2026/27, stabilising at around 17.8% in later MTEF years.
These figures highlight the need for effective debt management to reduce interest costs and support development priorities, according to treasury insights.
The total government debt is projected to increase from N$174.6 billion (which constituted 65.2% of GDP) in FY2025/26 to N$217.3 billion by FY2028/29.
According to the National Budget statement, domestic debt will constitute the majority, in order to bolster financial stability, while foreign debt, though moderate, plays a crucial role in diversifying funding sources,hHighlighting that more capital will be required from the domestic market, to enhance the competition for capital between the government and the private sector.
The Central Bank, however, has stated that there is no crowding out of the private sector yet because there is plenty of capital in the domestic market.
erastus@thevillager.com.na
