Schlettwein corrects notion of downgrade
Social media was abuzz last weekend following a misused term that implied that the country had suffered a ratings downgrade. The commotion may have drawn the ire of finance minister Hon. Calle Schlettwein who jumped in to set the record straight.
Speaking at a Insurance conference held at the coast, he said, “there have been some comments made in reaction to the release of this ratings opinion. First and foremost, Fitch Ratings has affirmed Namibia’s sovereign credit rating at the investment grade notch of BBB-. In this sense, the word ‘downgrade’ has been misused: this was not a ratings downgrade, as some have implied.
“At the same time, it is recognised that the outlook for Namibia’s rating has been revised by Fitch, from ‘stable’ to ‘negative’. As outlined by Fitch, this was based on a number of factors. It is important to remember that Namibia does not exist in a vacuum – the current challenging global growth outlook, depressed commodity prices, and in particular the weak economic performance of our neighbours in the region have most certainly led to lower growth in Namibia than was previously envisaged,” Schlettwein said.
“One of the major factors in this ratings opinion was the elevated level of public deficit to GDP observed in the 2015/16 financial year. This was chiefly the result of actual government revenue coming in below its target.
I agree with Fitch when they identify “a secular decline in SACU revenues” as one of the key challenges to Namibia’s public finances. SACU revenues have long constituted a large part of government revenue – around 30% in recent years. Many are estimating that the South African economy is bordering on a recession, and it is an unavoidable reality that a weaker South Africa means weaker government revenue in Namibia,” Schlettwein explained.
Said Schlettwein encouragingly said, “government will continue to address these challenges head on, and the Ministry of Finance will not shirk its duty in maintaining the macroeconomic and fiscal sustainability that is crucial to our development.
Thus, the Government will reinforce its time-tested approach to responsible public finance management, pro-growth fiscal policy and macroeconomic stability in the upcoming Mid-Year Budget Review for 2016 and the for next Medium Term Expenditure Framework”.