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AfDB loan and private sector borrowings push external debt higher- PSG Konsult

AfDB loan and private sector borrowings push external debt higher- PSG Konsult

Government’s foreign debt rose by 1.5% year on year (y-o-y) to N$27.69 billion in the second quarter of 2017 following the approval of the first tranche of a loan agreement with the African Development Bank (AfDB).

While, Private sector foreign debt rose by 14.9% y-o-y) to N$55.35 billion in the period under review, reflecting an increase in long-term loans during this period.

PSG Konsult Namibia forecast an increase in external debt this year. “Private sector external debt growth has moderated (from 36.3% y-o-y in 2014 to 7.9% y-o-y in 2016) and will likely reflect another modest growth rate in 2017, while public sector debt is forecast to increase at a faster rate in 2017 and 2018 due to the $750m AfDB loan agreement,” the firm’s analysts said.

The AfDB loan has pushed up multilateral loans’ share of total external debt significantly, from 9.0% in Q1 to 19.1% in Q2, while the share of bilateral loans (10.9%) and JSE listed bonds (10.4%) have decreased slightly.

PSG Konsult further stated that the Eurobond debt (59.6%) remains the major contributor to the government’s external stock of outstanding debt.

“More than 60% of the government’s total foreign debt outstanding is denominated in US dollars, while slightly more than 22% is denominated in rand. The share of external debt denominated in the South African currency also rose significantly in Q2 (from 9.9% in Q2 2016) as a result of the AfDB loan, which is rand-denominated,” said PSG.

Namibia issued its first $500 million Eurobond in 2011 and then opted to again tap international credit markets when it issued a $750 million Eurobond in October 2015. The latter pushed the central government’s share of gross external debt up to 35.9% at the end of Q4 2015 from 19.6% at the end of Q1 2015.

However, by the end of the Q2 2017, the central government’s share declined to 31.9% while private sector debt accounted for 74.6% of the country’s total external debt at the end of Q1 2015, but this share declined to 63.8% at the end of Q2 2017.


 

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Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys

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