Moody’s downgrades Namibia’s credit rating, changes outlook to stable
Global credit investment rating body, Moody’s Investor Service has downgraded the long-term issuer and senior unsecured ratings of the Namibian government from a Ba1 sub-investment grade down to Ba2 sub-investment and changed the outlook to stable.
According to Moody’s, the decision is underpinned by relatively robust institutions and governance strength that supports Moody’s view that policymakers retain some capacity to respond to shocks, helped by moderate liquidity and external vulnerability risk.
The firm noted that the country remains exposed to various long-standing shocks, namely subdued growth in South Africa, potentially lower than currently expected SACU revenue, a shock to commodity prices and/or a marked depreciation of the South African rand.
Moody’s further said he country’s institutions provide a transparent and predictable environment to businesses and individuals. In particular, Namibia’s Moody’s is of the view that Namibia’s adherence to the rule of law and control of corruption are relatively strong.
“Policy effectiveness is also supported by the pegged exchange rate arrangement that promotes stable price competitiveness with South Africa, Namibia’s largest trading partner. The arrangement also contributes to stable inflation at moderate levels by preventing sharp swings in the cost of imported goods,” Moody’s stated.