Domestic debt above N$17 bn
Government domestic debt levels have continued on an upward trend since the introduction of an expansionary budget in 2011 and in March they breached the N$17 billion mark for the first time.
Domestic debt increased from N$16.9 billion in February to N$17.2 billion driven mainly by an increase in internal registered stock debt which for the first time breached the N$9 billion mark.
Between February and March, debt in treasury bills increased by just 0.6%, whereas debt in internal registered stock increased by 3.8%.
But despite the domestic debt reaching record highs in March, Capricorn Group Economist Rowland Brown said at under 2.3%, this increase is the smallest month-on-month change since the introduction of the Ministry of Finance’s expansionary budget in 2011.
“Since the introduction of this budget, debt levels have increased by approximately 53%,” he said.
The main debt instruments used over this period were the GC14, which increased by N$150 million (a 13.6% increase); the GC17, which increased by N$80 million (an increase of 19.1%); the GC18, which also increased by N$80 million (an increase of 4.8%); the TB-365, which increased by 50 million (a 1.3% increase) and the GC21, which increased by N$20 million (an increase of 4.8%).
Coupon rates for domestic debt vary between 7.5% (GC14) and 13.0% (GC15), while current average yields vary from 6.05% (GC12) and 9.65% (GC27).
Current domestic debt levels are approximately 20% of GDP, with total debt approximately 27% of GDP. “Current debt is largely to fund governments TIPEEG programme, however execution rates in 2011/12 of below 75% on TIPEEG projects has meant that debt expansion has been slower than projected,” Brown said.
Further, Brown said abnormally high SACU revenues in 2012 (estimated at 13.9 billion, up from 7.1 billion in 2010/11) will help government run the expansionary budget without incurring further excessive debt.
Total external debt is estimated at approximately N$8.4 billion (awaiting quarterly data from the Bank of Namibia) after the issuance of the Eurobond in October 2011. Debt levels are expected to peak in 2013/14 at approximately 30% of GDP, before returning to approximately 28% in 2014/15 due to fiscal consolidation.
At current levels, Namibia’s debt remains amongst the countries with the lowest debt to GDP ratios in the world.