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Tuesday 20 August 2019
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Future generations in debt

Government will have to fork out around N$8 billion in 2021 to pay back central government bonds that will mature in that year.
This was all recorded in the Bank of Namibia Annual Report for 2017.
Of the close-to N$8 billion, more than N$6,1 billion is owed to one of two Eurobonds. The second Eurobond of N$9,29 billion is scheduled to mature on 29 October 2025.
According to the report the central government debt for the Eurobond was at N$5,2 billion in 2013, increased to N$5,8 in 2014  and ballooned to N$19,4 billion in 2015 before reducing to N$17 billion in 2016 and then N$15,4 billion in 2017.
Economist Mally Likukela said that the increase and decrease in the Eurobond debt and other loan debts may be as a result of the figures being recorded as accumulative debt and also as a result of the behaviour of the Namibia dollar or South African for that year.
This debt is part of a total local and foreign bonds amounting to more than N$46,7 billion, excluding multilateral and bilateral loans.
One bond of N$1,24 billion matured last year, while the rest of the bonds are scheduled to mature between 15 April 2020 and 15 July 2045.
Bilateral loans refer to loan agreements between two governments, while a multilateral loan refers to loans between the government and international organisation – such as the Africa Development Bank.
The report goes further to state that foreign bonds are 39.3% of this local and foreign bond number while the local bonds represent 60.7% of the total bond.
The foreign and local bond debt further forms part of a central government debt, that was standing at N$72,8 billion at the end of 2017. The report states that this central government debt was a 13,1% increase from the from the N$64,4 billion in 2016.
The 2017 central government debt as a percentage of the Gross Domestic Product also increased by 3,1 percentage points from 39,2% in 2016 to 42,3% at the end of 2017.
Debt increases in second quarter of 2018/2019 fiscal year
According to Bank of Namibia, Central Governments debts rose annually and as well as quarterly. The central government debt stood at N$80,6 billion at the end of September 2018.
This debt represented 42,4% of the of the Gross Domstic Product at the end of September last year.
The Eurobond, according to the Bank of Namibia quarterly report, is the biggest contributer to governments external debt, representing 61,5% of the external debt profile.
With the year 2021 drawing near, The Patriot asked Minister of Finance Calle Schlettwein whether Namibia will be able to finance the first Eurobond on its date of maturity.
The Namibian government will have to settle the bill between 03 May 2021 and 03 November 2021.
The finance minister said that apart from the one Eurobond maturing that year, 2021 is an important year for the country as a number of loans, including domestic, are maturing in that year.
Schlettwein told The Patriot on Wednesday that the Namibian government has a debt redemption fund which is well serviced and will be able to cater to all the loans as they mature in 2021.
“We have been saving for some time now in preparation for the paying back of these loans,” the minister said.
Schlettwein said that the main reason for borrowing money was necessitated by the financial crisis that persisted in the period 2008 to 2010.
He added that because Namibia was lowly indebted, the country could take up the debt.
Economist Likukela, however told The Patriot that Namibia was not affected by the international  financial crisis between 2008 and 2009 as the Namibia dollar was shielded by the South African Rand.
The economist believes that Namibia has been borrowing in-order to fund the Harambee Prosperity Plan (HPP) as well as the National Development Plans. He added that government did not anticipate the financial troubles the country would face and therefore needed to borrow inorder to maintain the same trajectory.
HPP is  an action plan launched in April 2016, to support priority interventions identified in the Government’s national development plan.
Likukela went further to say that the borrowing was favourable for the voter because the money is used for infrastructural development.
“We have been borrowing to keep the voter happy,” he said.
The Patriot in December 2017 reported that Namibia received N$7 billion in loans from the African Development Bank between May and December 2017.
N$2 billion of that loan was pumped into the Namibian economy to finance developments in Namibia’s education and training sector, as well as its agriculture sector.
N$3 billion of that money was pumped into Namibia, as a loan to finance the country’s development programme in 2017 this year, specifically focusing on economic governance and improving competitiveness.
The Patriot also reported that the interventions were part of the priority projects identified in the government’s Harambee Prosperity Plan.




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