Namibia’s growing reliance on domestic borrowing is placing increasing pressure on the local financial system, as government faces a total financing requirement of N$29.22 billion in the 2026/27 financial year, equivalent to 10.2% of GDP and 32.6% of projected annual revenue.
According to a new debt outlook by Simonis Storm economist Almandro Jansen, the country’s debt challenge is increasingly becoming a domestic cash flow and refinancing problem rather than a conventional debt stock issue.
Government plans net domestic borrowing of N$20.22 billion during FY2026/27, while also rolling over a Treasury Bill stock of N$48.8 billion within 12 months.
The May to July 2026 borrowing calendar alone includes planned issuances of N$6.46 billion, representing about 32% of the annual domestic borrowing target.
“The more realistic risk is crowding out. This happens when the state absorbs an increasing share of domestic savings, leaving less capital available for private credit, corporate issuance, infrastructure finance and equity investment,” Jansen said.
The report warned that sustained sovereign borrowing could increasingly reshape capital allocation within the domestic financial system, with investors favouring government securities over private sector lending.
Late April market data cited in the report showed Treasury Bill yields ranging between 7.1% and 7.4%, while long-dated government bonds were yielding above 11.5%.
“When government paper offers attractive nominal yields, private issuers must compete against the sovereign. Projects that might have been viable at lower hurdle rates become less attractive,” Jansen said.
Simonis Storm argued that Namibia’s fiscal pressure is not fully reflected in the headline deficit figure.
While the fiscal deficit for FY2026/27 is projected at N$15.78 billion, or 5.5% of GDP, the actual cash government must raise is significantly larger once bond redemptions, foreign loan repayments, VAT refunds and other obligations are included.
“For FY2026/27, government requires total financing of N$29.22 billion, equal to 10.2% of GDP. Against projected revenue of N$89.56 billion, the total financing requirement is equal to 32.6% of annual revenue. That is the true funding burden,” Jansen said.
The report noted that expenditure is expected to remain above N$106 billion, while revenue is projected to decline by 3.3%, from N$92.63 billion in FY2025/26 to N$89.56 billion in FY2026/27.
Interest payments are projected at around N$16.2 billion, close to the size of the overall fiscal deficit.
“With interest payments around N$16.2 billion and the deficit at N$15.78 billion, the state is close to primary balance before interest but remains in a large deficit after debt service. This means past borrowing is now driving current borrowing,” Jansen said.
Simonis Storm also examined the October 2025 redemption of Namibia’s US$750 million Eurobond, which was financed through a combination of sinking fund resources and approximately N$6 billion in commercial bank loans.
According to the report, external debt declined from N$37.96 billion to N$19.76 billion between March 2025 and March 2026, while domestic debt rose from N$129.19 billion to N$152.93 billion.
Commercial loans increased from zero to N$6 billion over the same period.
“That is not deleveraging. It is liability transformation. Namibia reduced direct hard currency refinancing risk, but it increased local funding dependence,” Jansen said.
Standard Bank Namibia provided N$3 billion towards the refinancing package, while FNB Namibia contributed N$1.5 billion. Bank Windhoek and Absa Bank Namibia jointly provided the remaining N$1.5 billion.
The report further warned that Namibia’s external financing strategy still carries risks despite the shift towards domestic funding.
Of the planned N$9 billion in foreign financing for FY2026/27, N$7.11 billion, or about 79%, is classified as optional financing.
Simonis Storm also cautioned against expectations that oil and gas development will provide immediate fiscal relief, noting that government’s FY2026/27 borrowing requirement includes N$2.15 billion in oil and gas-related VAT refunds.
