Namibia faces N$197bn debt burden - analysts

Namibia is heading towards a N$197 billion government debt burden and a widening budget deficit of N$21.5 billion, as weaker revenue collections, rising interest payments and substantial debt repayment obligations place increasing pressure on public finances during the 2026/27 financial year.The projections by Cirrus Securities, contained in its FY2026/27 mid-year budget primer, show the government faces a larger financing challenge than anticipated when the national budget was presented in February.Finance minister Ericah Shafudah is expected to table the mid-term budget soon.Cirrus expects the budget deficit to widen to 7.5% of gross domestic product (GDP), compared to government's original projection of 5.5%, while total debt is forecast to reach 68.9% of GDP, against the budget estimate of 67.8%.The deterioration comes as interest payments are projected to reach N$16.5 billion, absorbing 19.4% of government revenue, while government's August financing plan provides for approximately N$6.7 billion in bond redemptions and foreign loan principal repayments.According to Cirrus, government revenue is expected to reach N$84.9 billion, falling N$4.7 billion below the N$89.6 billion originally budgeted, while expenditure is forecast at N$106.4 billion.This would leave a deficit of N$21.5 billion, about N$5.7 billion more than the N$15.8 billion shortfall projected in February.The higher forecast follows a deterioration in the government’s fiscal position in the previous financial year, when the revised deficit for 2025/26 reached N$17.7 billion, or 6.6% of GDP.Government debt stood at an estimated N$174.6 billion in 2025/26, meaning the Cirrus forecast implies an increase of about N$22.4 billion in the current financial year.The projected rise in debt is accompanied by growing interest obligations, which have increased from N$13.1 billion in 2024/25 to an estimated N$14.3 billion in 2025/26, before the projected N$16.5 billion in 2026/27.As a proportion of government revenue, interest payments have risen from 14.7% in 2024/25 to 16.4% in 2025/26, with Cirrus expecting the ratio to reach 19.4% this financial year.Debt repayments increase borrowing needsGovernment's financing requirements extend beyond the budget deficit because the treasury must also meet debt repayments and other cash obligations.Figures presented by Cirrus show that government's net borrowing requirement increased from N$19.217 billion in the February budget to N$29.221 billion in the August borrowing plan.The August financing figures include N$3.585 billion in bond redemptions involving GC26, GC27 and NAM04, together with N$3.137 billion in foreign loan principal repayments.The plan also incorporates N$2.147 billion in value-added tax refunds associated with the oil and gas industry and a N$4.572 billion cash requirement.These financing commitments help explain why government's borrowing needs are substantially higher than the budget deficit alone.While Cirrus projects a N$21.5 billion deficit, the N$29.221 billion borrowing requirement reflects government's August financing plan, which still uses the original N$15.780 billion deficit estimate.The report also shows a substantial shift in the composition of government financing, with foreign financing declining from N$9 billion in the May borrowing plan to N$1.887 billion in August.The reduction followed the removal of N$7.113 billion in additional foreign financing previously included in the May plan.Consequently, net domestic borrowing increased to N$27.334 billion, compared with the N$17.329 billion initially projected in February and N$20.221 billion in May.By the end of September, government had raised N$16.526 billion domestically, representing approximately 60.5% of the revised domestic borrowing requirement.Revenue collection pressuresThe projected widening of the deficit comes against a weaker revenue outlook, with Cirrus estimating that government will collect N$84.9 billion rather than the N$89.6 billion anticipated in February.The report's revenue analysis shows that collections during the first four months of the financial year were below the pace needed to meet the annual budget target.Figures presented for April to July indicate that approximately N$31.8 billion had been collected, with Cirrus examining the amount against historical mid-year collection patterns and the proportion of annual revenue typically received during the second half of the financial year.Cirrus also presents different revenue outcomes depending on the proportion of annual collections received during the second half of the financial year, illustrating the sensitivity of the budget position to revenue performance.Namibia's economy grew by 1.7% in 2025, following growth of 3.8% in 2024 and 4.3% in 2023, Cirrus's figures show.Mining figures for April to June 2026 show that zinc concentrate production declined by 24.2% year-on-year, gold bullion output fell by 17.8% and uranium production contracted by 14.8%. Diamond sales volumes declined by 6.7%, while the value of diamond sales fell by 9.8%.Cirrus's expenditure analysis shows that government spending remains elevated, with the February budget providing for total expenditure of approximately N$106 billion during 2026/27.The research firm forecasts expenditure of N$106.4 billion, slightly above the original budget provision. Interest charges feature prominently in the operational expenditure projections, with the report showing their increase relative to other spending categories. The development expenditure analysis also illustrates the relatively small share of total expenditure allocated to capital and development activities.

Namibia faces N$197bn debt burden - analysts

Comments

Namibian Sun 2026-10-21

Please login to leave a comment

Namibia faces N$197bn debt burden - analysts

Comments

Namibian Sun 2026-10-21

Please login to leave a comment

Subscription Required to Access Content ×

Login

Subscription Required to Access Content