By: Nghiinomenwa-vali Hangala
The Ministry of Finance has decided to borrow almost all of its budget shortfall from the domestic market.
Of the N$29.2 billion financing requirement, N$27.3 billion will be sourced from the domestic market, according to the updated Borrowing Plan as prepared by the central government’s treasurer.
Previously, the government earmarked N$9 billion to be sourced from foreign financing.
The government has, however, reallocated most of the amount from foreign financing to domestic borrowing.
According to the updated Borrowing Plan, the government had consultations with domestic institutional investors and has found that the local market has the capacity to absorb what they intend to borrow from outside.
As a result, N$7.1 billion from the previously earmarked foreign financing was reallocated to domestic borrowing.
This raises domestic financing from N$20.2 billion to N$27.3 billion, with foreign financing falling to N$1.9 billion.
However, the aggregate FY2026/27 requirement is unchanged at N$29.2 billion.
“The revised domestic allocation reflects a change in the source of financing and does not alter the aggregate FY2026/27 financing requirement,” the report read.
As a result, the revised August to October borrowing programme provides for the government to borrow N$10.1 billion. This includes the N$1.2 billion cash shortfall on bonds that was experienced in the first quarter.
As for August 2026, the central government will borrow N$3.9 billion from the market, and in September it will borrow N$3.1 billion.
While the remaining N$3.04 billion will be borrowed in October 2026. The Treasury explained that the quarterly borrowing requirement reflects the cash required for financing.
Amounts will also be adjusted to ensure the full cash requirement is raised, taking account of settlement prices, accrued interest, premiums or discounts, net-currency effects and prevailing market conditions.
Domestic debt stood at N$160.9 billion at the end of July 2026, increasing by 2.4% month-on-month.
According to the Central Bank, the increase was reflected in both Internal Registered Stock (IRS) and Treasury Bills (TBs), which increased by 3.0% and 1.1% to N$110.7 billion and N$50.2 billion, respectively.
Year-on-year domestic debt rose by 17.9% given increased issuance of both IRS and TBs.
Domestic debt as a percentage of GDP increased by 1.2% points month-on-month, to 53.2% during the period under review.
Similarly, on an annual basis, the ratio of domestic debt to GDP rose by 3.8% points, reflecting an increase in the ratios of the IRS and TBs to GDP of 3.1% points and 0.7% points respectively.
The government also continues to hold GC27 switch auctions; the last switch was held last week, and N$942 million was switched as a result. The government now owes N$4.1 billion through the GC217.
However, its plans are to convince more investors to switch their money to long-term bonds on 24 Aug, 23 Sep, and 21 October 2026.
