Government debt increases by 5.8% in 2nd quarter
The government debt increased by 5.8% to N$78.3 billion in the second quarter this year, according to the Bank of Namibia’s (central bank) latest data.
The central bank ascribed this increase to a rise in domestic borrowing to fund public expenditure and higher foreign debt stemming from the depreciation of the Namibian dollar.
Looking at a breakdown of the government’s foreign debt, Eurobond debt (60.5%) remained the major contributor to the government’s external debt stock, while the share of multilateral loans declined slightly to 18.4% in the quarter under review from 19.8% in the first quarter.
Analysts at PSG Konsult Namibia said that government external debt is expected to surge higher again in the third quarter of the year, due to further currency depreciation and another disbursement of the African Development Bank loan agreement.
“The increase in debt servicing costs crowds out government expenditure on economic development. The government is not expected to tap Eurobond markets anytime soon and has adopted a fiscal tightening stance to curb the deterioration of the public debt-to-GDP ratio,” PSG said.
Meanwhile, Finance Minister, Calle Schlettwein, will give an update of the government’s fiscal policy targets during the Mid-year Budget Review in the final week of October.