The Bank of Namibia (BoN) has announced that the government’s domestic borrowing requirement has increased to N$20 billion for the current fiscal year, up from N$15 billion last year, mainly to meet upcoming debt repayments.
BoN Governor Johannes !Gawaxab said the rise in borrowing is not the result of a growing budget deficit, but is instead driven by the need to repay existing debts, including local bonds, foreign loans, and a Eurobond maturing next year.
“I want to make use of this opportunity to emphasise that the bulk of the increase in issuance that we see is not on the back of a significantly larger budget deficit, but rather to cater for the repayment of existing debt,” said !Gawaxab.
Namibia faces a significant Eurobond repayment of US$750 million in October 2025. To prepare for this, the central bank has built a sinking fund which currently stands at US$468 million. !Gawaxab said an additional N$3 billion will be transferred into the fund before the bond matures.
“On this Eurobond, we know that the government has set up a sinking fund. We have diligently built this to a current balance of US$468 million, with the commitment to transfer another N$3 billion before the bond matures in October 2025,” he said.
!Gawaxab further noted that the central bank has successfully conducted all planned government borrowing auctions to date, with full subscription and no shortfalls. While investor demand has favoured shorter-term bonds, pricing remains favourable.
“Namibian bonds are still pricing at very palatable spreads of less than 100 basis points over the South African benchmarks across all tenors. These levels remain significantly below the historical spreads between Namibia and South Africa,” he said.
The Governor also pointed to healthy liquidity in the local banking sector, which continues to support the government’s borrowing plans.
“The latest figure that I got is that we have got, particularly in the banking sector, an industry liquidity ratio of 24% against a 10% requirement. So the system is quite liquid. We don’t see any major challenges in raising the rest of the borrowing requirement,” said !Gawaxab.
