Outlook not signal of collapse
An economist says the Namibian authorities have been responsive to credit ratings, unlike some other African countries.
Namibia's negative economic outlook does not signal the collapse of the domestic economy or an inability to finance debt, a local economist has said.
On 2 December 2016, Moody's Investor Services downgraded Namibia's economic outlook from stable to negative.
The rating agency said the downgrade was due to various reasons including rising government debt and liquidity stress induced by reliance on external export.
Another credit-rating agency, Fitch Ratings, undertook a review mission to Namibia from 3 to 4 August 2016 and on 2 September it revised the country's economic outlook from stable to negative.
In an interview on Thursday, Claudia Boamah told Nampa that conclusions drawn by these agencies showed that Namibia's rating was still of investment grade.
Boamah said so far, Namibia's economic leadership had taken the ratings into consideration and had been responsive, unlike elsewhere on the continent where such ratings appeared to be ignored.
“The whole world only just began to recover after enduring eight years of a global recession, which had adverse effects on the domestic export revenue due to falling commodity prices.”
In its report, Moody's noted that countries like Namibia that rely on commodities would continue experiencing challenges in 2017.
“Sub-Saharan Africa's economies will continue to face commodity-induced liquidity stress in 2017, with recurring fiscal deficits amid challenging financing conditions,” said the Moody's report.
Responsive strategies have been devised and to some extent implemented, Boamah said, which should assist in coping with challenges in 2017.
She said finance minister Calle Schlettwein had implemented austerity measures such as a freeze of non-priority government construction projects and an embargo on recruitment in the public sector.
The economist explained Namibia's agricultural production was stunted by the drought, which also triggered an increase in government expenditure to provide drought relief. “Perhaps recent efforts to boost international and domestic tourism indicate a proactive and creative approach to increase foreign revenue.”
Boamah said Moody's credit rating was calculated based on factors such as per capita income, gross domestic product (GDP) growth, inflation, external debt, level of economic development and credit default history.
NAMPA
On 2 December 2016, Moody's Investor Services downgraded Namibia's economic outlook from stable to negative.
The rating agency said the downgrade was due to various reasons including rising government debt and liquidity stress induced by reliance on external export.
Another credit-rating agency, Fitch Ratings, undertook a review mission to Namibia from 3 to 4 August 2016 and on 2 September it revised the country's economic outlook from stable to negative.
In an interview on Thursday, Claudia Boamah told Nampa that conclusions drawn by these agencies showed that Namibia's rating was still of investment grade.
Boamah said so far, Namibia's economic leadership had taken the ratings into consideration and had been responsive, unlike elsewhere on the continent where such ratings appeared to be ignored.
“The whole world only just began to recover after enduring eight years of a global recession, which had adverse effects on the domestic export revenue due to falling commodity prices.”
In its report, Moody's noted that countries like Namibia that rely on commodities would continue experiencing challenges in 2017.
“Sub-Saharan Africa's economies will continue to face commodity-induced liquidity stress in 2017, with recurring fiscal deficits amid challenging financing conditions,” said the Moody's report.
Responsive strategies have been devised and to some extent implemented, Boamah said, which should assist in coping with challenges in 2017.
She said finance minister Calle Schlettwein had implemented austerity measures such as a freeze of non-priority government construction projects and an embargo on recruitment in the public sector.
The economist explained Namibia's agricultural production was stunted by the drought, which also triggered an increase in government expenditure to provide drought relief. “Perhaps recent efforts to boost international and domestic tourism indicate a proactive and creative approach to increase foreign revenue.”
Boamah said Moody's credit rating was calculated based on factors such as per capita income, gross domestic product (GDP) growth, inflation, external debt, level of economic development and credit default history.
NAMPA
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