Almost N$1 in every N$5 Govt collects pays debt interest

Almost N$1 in every N$5 collected by the Namibian government during the 2026/27 financial year could go towards interest payments on public debt, with Cirrus Securities and Simonis Storm Securities projecting that borrowing costs will consume nearly 20% of government revenue.Cirrus projects an interest bill of N$16.5 billion, equivalent to 19.4% of its N$84.9 billion revenue forecast, while Simonis Storm expects N$16.6 billion in interest payments, representing 19% of its N$87.5 billion revenue projection.The difference arises because Cirrus expects government to collect N$2.6 billion less revenue than Simonis Storm, meaning its slightly smaller interest bill would consume a larger proportion of government income.Both firms expect interest payments to exceed government's original allocation of N$16.2 billion, which represented 18.1% of the N$89.6 billion in revenue anticipated when the national budget was presented in February.The projections come ahead of finance minister Ericah Shafudah's expected presentation of the 2026/27 mid-year budget review in the National Assembly today. When she tabled the 2026/27 national budget, the Bank of Namibia's repo rate stood at 6.5%, while annual inflation was 2.9% in January. However, the central bank increased the repo rate to 6.75% in June, while annual inflation rose to 5.4% in September.Interest bill almost quadruplesGovernment interest payments have increased sharply over the past decade, from approximately N$4.31 billion in 2016/17 to N$6.95 billion in 2019/20 and about N$9.1 billion in 2022/23.By 2024/25, the interest bill had reached N$13.1 billion, according to Cirrus, while revised estimates for 2025/26 placed it at N$14.3 billion.The N$16.5 billion to N$16.6 billion now projected would represent almost four times the amount recorded in 2016/17.Cirrus expects government revenue of N$84.9 billion against expenditure of N$106.4 billion, producing a deficit of N$21.5 billion, compared with the N$15.8 billion originally budgeted.The firm also projects government debt of N$197 billion during 2026/27, against the original estimate of N$193.8 billion.Simonis Storm expects the deficit to widen to approximately 6.5% of gross domestic product, compared with the government's original target of 5.5%, and projects that the planned primary surplus will turn into a deficit of 0.7% of GDP.According to Cirrus, planned net domestic borrowing increased from N$17.33 billion in February to N$20.22 billion in May and N$27.33 billion in August, approximately N$10 billion above the original requirement.By the end of September, N$16.53 billion had been raised against the revised domestic borrowing plan.The projected interest bill of N$16.5 billion to N$16.6 billion is approximately two-and-a-half times the N$6.5 billion allocated to domestically funded development spending in the original budget.Who receives the interest payments?The government's largest borrowing obligations are to investors holding Namibian Treasury bills and government bonds, including pension funds, commercial banks, insurance companies and investment managers.Government's debt portfolio in January 2026 showed N$47.21 billion outstanding in domestic Treasury bills, N$91.78 billion in fixed-rate government bonds and N$10.03 billion in inflation-linked bonds.Together, these securities amounted to approximately N$149 billion, accounting for more than 85% of the N$174.58 billion debt portfolio.One of the largest publicly identifiable institutional holders of government debt is the Government Institutions Pension Fund (GIPF), which held N$28.79 billion in Namibian government bonds at 31 March 2025, according to its latest published audited financial statements.This represented an increase of N$5.77 billion, or 25%, from the N$23.02 billion recorded a year earlier.GIPF manages retirement savings for public-sector employees and pensioners, making it a significant investor in government debt. However, the N$28.79 billion represents its bond holdings rather than the interest income received.Commercial banks, insurers and investment managers also participate in the domestic government securities market, although published figures do not identify every institution's holdings or the interest received by individual investors.Government's January 2026 debt portfolio also included N$12.05 billion in foreign variable-rate loans, N$7.18 billion in fixed-rate loans and N$335 million in foreign bonds.Simonis Storm attributes the expected increase in interest payments principally to higher Treasury bill financing costs and inflation-linked government bonds.“The overshoot is concentrated in the one line Treasury cannot cut: interest,” the firm said in its Mid-Year Budget Review Preview, published on 19 October.Simonis Storm warned that if the interest rate on government borrowing increases by one percentage point, government could pay an additional N$800 million a year in interest on Treasury bills and newly issued bonds.The firm also compared Namibia's projected interest-to-revenue ratio of approximately 19% with a median of about 11% for countries in the BB credit-rating category, using Fitch figures.

Almost N$1 in every N$5 Govt collects pays debt interest

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Namibian Sun 2026-10-22

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Almost N$1 in every N$5 Govt collects pays debt interest

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Namibian Sun 2026-10-22

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