Domestic debt has surged to N$8.7 billion, marking an upward revision from the initial projection of N$7.5 billion stated in the main budget.
This adjustment is a response to several financial factors, including a N$579 million increase in the budget deficit, an additional cash requirement of N$273 million, and a N$323 million reduction in foreign borrowing. Consequently, the borrowing plan will be adapted accordingly.
The domestic debt stock is anticipated to rise to N$114.5 billion, up from the earlier estimate of N$113.0 billion from the main budget. As a percentage of GDP, domestic debt is expected to remain relatively stable at around 50.0 percent throughout the Medium Term Expenditure Framework (MTEF) period.
Regarding foreign debt for the 2023/2024 fiscal year, external debt funding has been trimmed down from N$2.6 billion to N$2.3 billion due to reduced disbursements caused by the sluggish progress of ongoing projects. To address this, N$629 million and N$204 million will be obtained from the African Development Bank (AfDB) and KfW to finance these ongoing projects, as previously outlined in the main budget.
Additionally, a sum of N$1.4 billion is expected from a policy-based loan (PBL) to provide budget support. Over the MTEF, external debt is projected to see a slight increase, reaching N$40.5 billion in 2024/25 before declining to N$36.9 billion in 2025/26, mainly due to the anticipated partial redemption of the Eurobond in 2025. The foreign debt is projected to reach N$37.7 billion at the end of the MTEF period, with external debt as a percentage of GDP averaging around 14.3 percent over the next MTEF.
From an overall financial perspective, the financing requirement has elevated the central government’s total debt stock to N$153.7 billion for 2023/24. However, for the remainder of the MTEF, the total debt is expected to increase gradually. Nonetheless, when measured as a ratio of GDP, the total debt reached its peak in the previous fiscal year and is projected to decrease to 66 percent of GDP in 2023/24. Looking ahead, the overall debt stock is anticipated to stabilize over the MTEF.
