Foreign debt drops slightly in first quarter
External debt declined in the first quarter of this year, according to the Bank of Namibia’s (BoN) latest data, showing that the total (private and public sector) external debt stock decreased to N$95.1 billion at the end of the first quarter of 2018.
The central government’s foreign debt declined by 3.8% quarterly to N$25.4 billion in the quarter under review. The BoN ascribed this decrease to the appreciation of the local currency against major foreign currencies.
The Eurobond debt (57.8%) remained the major contributor to the government’s external stock of outstanding debt, while the disbursement of an African Development Bank (AfDB) loan has pushed up multilateral loans’ share of central government external debt significantly to 19.8% in Q1 from 9.0% a year earlier. This is while the shares of bilateral loans (11.1%) and JSE listed bonds (11.4%) have decreased slightly over the same period. Nearly 60% of the government’s total foreign debt outstanding is denominated in US dollars, while 24% is denominated in rand.
The central bank also added that the share of external debt denominated in the South African currency also rose significantly in Q1 (from 12.6% in Q1 2017) as a result of the AfDB loan, which is rand-denominated.
Meanwhile, the private sector foreign debt declined by 1.8% quarterly to N$65.7 billion in Q1 2018, mainly due to decreased borrowing by enterprises in the mining sector. In contrast, the external debt of parastatals increased by 6.7% to N$4 billion at the end of Q1.
PSG Konsult Namibia noted that looking ahead, external debt is forecast to increase further this year.
“The government is not expected to tap Eurobond markets any time soon and has adopted a fiscal tightening path to curb the deterioration of the public debt-to-GDP ratio,” PSG explained.