Government guarantees extended to public enterprises are expected to increase slightly to N$9.3 billion in the 2024/25 financial year compared to the revised estimate of N$9.1 billion in the 2023/24 financial year.
Of these guarantees, N$2.2 billion was issued to domestic financial institutions while N$7.1 billion is issued to foreign lenders. For the subsequent years of the Medium Term Expenditure Framework (MTEF), total government guarantees are expected to rise to N$9.8 billion.
The newly issued guarantees in the 2023/24 financial year were in support of entities such as Meatco and Namcor for business rescue and recapitalisation, and the Namibia Student Financial Assistance Fund (NSFAF) to augment student loan awards. Further, guarantees were issued to NamPost for microfinance loans to small-business enterprises in the rural areas.
Going forward, guarantees are expected to be issued to NamPower for the Transmission Expansion and Energy Storage (TEES) project. Although the total amount of government guarantees is expected to increase in the near term, it is anticipated that the guarantees as a percentage of GDP will decrease gradually.
As such, the guaranteed as a ratio of GDP is estimated to decrease slightly to 3.4% in the 2024/25 financial year from a revised 3.7% in 2023/24. In the subsequent years of the MTEF, the guarantees as a percentage of GDP are estimated to stabilize at an average of 3.1%. The rapid decrease in guarantees is driven by the buoyant increase in GDP and the lower uptake of new guarantees.
In the financial year 2023/24, the National Fishing Corporation (Fishcor) the government honoured a call of N$63 million on public guaranteed loan to the Seaflower Whitefish Corporation, a Fishcor subsidiary.
Furthermore, Fishcor will benefit from a provision of N$107.7 million for the settlement of their legacy tax liabilities.
From a contingent liability perspective, the government repaid a guaranteed Meatco loan of more than N$500 million. Going forward, further provisions of N$112 million has been made in 2024/25 budget to meet Meatco debt obligations and another N$100 million for operational funding.
Financial provision to the tune of N$300 million has been made for TransNamib in 2024/25 financial year. Going forward, TransNamib is anticipated to require financial support over the MTEF as government works to address structural challenges in the rail sector.
