Justicia Shipena
The government’s debt grew by 8.3% over the past year, reaching N$166.7 billion at the end of March 2025.
This increase was mostly due to the government borrowing more through Treasury Bills and Internal Registered Stock, according to the Bank of Namibia’s (BoN) latest quarterly bulletin.
As a result, the country’s debt now equals 66.3% of its total economic output (GDP), which is above the regional target of 60 percent set by SADC.
However, BoN’s director for strategic communications and international relations said the central bank predicts this ratio to drop to 61.4% over the next few years.
“The debt trajectory remains under control, but fiscal discipline and structural reforms are key in reversing the upward trend,” he said.
He said the government’s external debt declined slightly, due in part to the start of principal repayments on the International Monetary Fund’s (IMF) rapid financing instrument and the strengthening of the Namibian dollar against major currencies.
While debt rose, government loan guarantees as a percentage of GDP declined by 0.2 percentage points to 3.4% in the first quarter of 2025.
This remains well below the government’s ceiling of 10 percent of GDP.
“At this level, loan guarantees pose minimal contingent liability risk to public finances,” Zemburuka noted.
On the external sector front, the current account deficit widened to N$15.2 billion in the first quarter of 2025, up from N$11.2 billion during the same period last year and N$11.7 billion in the previous quarter.
The growing deficit was driven by increased outflows in the services account, particularly related to intensified oil exploration in the Orange Basin, and higher dividend payments to foreign investors.
Despite strong inflows on the financial account, especially from direct investment, they were not enough to offset the deficit, according to the central bank.
As a result, the stock of foreign reserves fell by 5.2% quarter-on-quarter to N$59.7 billion by the end of March, translating to an estimated 3.9 months of import cover.
Excluding oil-related expenditures, the import cover stood at 4.2 months.
Foreign reserves declined further to N$57.4 billion by the end of May 2025, largely due to higher trade-related and portfolio outflows by commercial banks.
“This reduction in reserves reflects pressure from increased foreign obligations and the lag in corresponding inflows,” said Zemburuka.
During the first quarter, the country’s external balance sheet remained in a net liability position, driven by a fall in gross foreign assets and a rise in foreign liabilities.
The Real Effective Exchange Rate appreciated by 3.1 percent year-on-year, suggesting a relative decline in the international competitiveness of Namibian exports.
“The appreciation of the Namibian dollar affects export performance, and we continue to monitor external dynamics closely to safeguard macroeconomic stability.”
