New bilateral financing agreement with German development bank opens door for parastatals to borrow
The Ministry of Finance signed a new financing agreement with the German Government this week, opening the door for other public sector borrowers to also tap the German development bank’s credit lines.
On Monday, 24 June, the Namibian Government represented by the Minister of Finance, Hon Calle Schlettwein, signed the agreement with the German Ambassador, HE Christian Schlaga, at a signing ceremony at the Ministry of Finance headquarters in Windhoek.
This agreement enables the government, or any other designated public borrower, to obtain preferential financing from the Kreditanstalt fuer Wiederaufbau (KfW) for projects in natural resource management, sustainable development, and the transport sector. The agreement makes provision for interest-subsidised funding to the value of approximately N$1.3 billion.
Schlettwein said Germany remains a major bilateral development cooperating partner to Namibia despite the country’s classification as an Upper Middle Income Country, which has led to other partners withdrawing, reducing or changing their mode of cooperation with Namibia.
The intended financing targets development projects as defined in the fifth National Development Plan. It reflects the outcome of the government to government negotiations and provides for preferential loans for, inter alia, potable water supply and the support programme for national road maintenance and rehabilitation.
The minister emphasised that the new loans do not constitute additional borrowing but translates to funding for budgeted projects. Disbursements are done in Namibia Dollar to eliminate forex risks.
KfW loans have already been deployed for financing of many projects relating to water, transport, communication, government payment services, and extending financial services.