By Hilary Mare
NAMIBIA domestic and foreign debt has continued its upward trend recording an increase at the end of January, Simonis and Storm Securities (SSS) has affirmed.
Rosemary Strauss, a trainee analyst at the securities firm last week told Confidente that Namibia’s total debt stood at N$159.3 billion at the end of December 2017, reflecting a year-over-year (y-o-y) growth of 6.7 percent compared to 13.3 percent y-o-y in December 2016.
Despite total debt decreasing on a month-on-month (m-o-m) basis to 0.2 percent, Strauss stressed that the total domestic debt came in at N$46.7 billion at the end of January 2018 compared to N$46.3 billion in December 2017.
“Total foreign debt increased to N$24.7 billion in January 2018 compared to N$23.2 billion in December 2017,” said Strauss.
PSCE increased at a slower pace of 0.87 percent m-o-m at the end of December 2017 compare to the previous month of 0.54 percent.
The slow growth in Private Sector Credit Extensions (PSCE) was reflected in slow growth from the instalment and overdraft credit facilities that contracted by 0.08 percent m-o-m and 0.12 percent m-o-m, respectively.
However, on an annual basis the total PSCE increased at a slower rate by 5.1 percent at the end of December 2017 compared to the 8.9 percent in December 2016. The slower growth rate is mainly due to lower demand for credit from both the household and corporate sectors.
“We expect the sluggish growth in PSCE to continue as banking industry credit tightening and a decrease in domestic aggregate demand maintains its stranglehold on the economy,” Strauss said.
Late last year, Simonis and Storm Securities offered a full macro- economic outlook for 2018, noting vehemently that it remains worrisome that the debt growth level is projected to rise above the economic growth rate.
Government public debt is expected to hover around 44.0percent of GDP over the MTEF compared to a 37.7 percent previously forecasted over the MTEF period.
Overall public debt is expected to expand through increases in public expenditure over the MTEF period.
“The Government remains indebted, with debt to GDP hovering around 43percent to GDP at the end of October 2017,” Junior Analyst, Indileni Nanghonga said in report in December.
“This is above the 35 percent threshold. We believe that government will remain indebted for a prolonged period as it has expanded its borrowing targets on domestic and foreign borrowing as a percent of GDP to 27.2 percent and 17.0 percent, respectively, compared to 22.8 percent and 14.0percent previously forecasted.”
Also forecasted overall government revenue to contract by 5.7percent to N$53.9billion for FY2018/19 compared to the estimated budgeted revenue of N$57.2billion.
“As a result, we expect the budget deficit as a percent of GDP to be -5.6 percent for FY2018/19, compared to a revised -5.3 percent estimated by the MOF for the same period.”
Nanghonga continued: “This is on account of a shortfall in SACU revenue and on lower tax collections than forecasted due to a weaker than expected economy. Namibia remains highly reliant on SACU revenue as 39.1percent of taxes collected was generated from the SACU revenue pool. With SACU revenue set to remain under pressure in the future we expect government revenue to remain subdued,” Nanghonga explained.”
Confidente. Lifting the Lid. Copyright © 2015