Namibia is on track to redeem its US$750 million Eurobond when it matures on 29 October 2025, with the government’s sinking fund now standing at more than US$500 million, well above the halfway mark required for repayment.
According to Nicholas Mukasa, Director of Financial Markets at the Bank of Namibia and a member of the Monetary Policy Committee, the fund was built up gradually through quarterly allocations from foreign inflows and forms a central pillar of the country’s sovereign debt management strategy.
“The current balance stands at over 500 million US dollars in that particular sinking fund. I’m pleased to report that we are executing in line with this calendar, having already met over 50% of our borrowing requirements to date,” he said.
Mukasa said the remaining amount for the Eurobond redemption will be financed through accumulated savings and increased domestic bond issuances, as the government prioritises converting foreign debt into domestic liabilities.
“We want to convert that debt (Eurobond) into a domestic liability, which is why we are focusing on the domestic market,” he explained.
For the 2025/26 financial year, the Bank’s borrowing plan is set at N$21 billion, up from N$14 billion the previous year. Investor appetite has been strong, with auctions since April oversubscribed and interest recorded in both long- and short-term bonds. “The terms have not yet been finalised, but we are very close to reaching agreements, and progress is going well. Overall, the confidence I can convey in this room is that, with regard to the borrowing plan, everything is proceeding according to plan,” Mukasa said.
This comes as Finance Minister Ericah Shafudah, in March, revealed the fund had accumulated US$463 million in its sinking fund, with plans to inject an additional N$3 billion (US$162 million) into the fund during the current fiscal year.
According to Robert McGregor, Head of Research at Cirrus Capital Namibia, the decision to issue the US$750 million Eurobond in 2015 was driven by several factors, including a liquidity crunch for the central government following a revenue shock, weak demand in domestic debt auctions, and the need to bolster the country’s international reserves, which had deteriorated significantly.
Ministry of Finance spokesperson, Wilson Shikoto, said the proceeds were also channelled into industrialisation projects and infrastructure development in power, water, logistics, and transport, as well as education initiatives to support skills development.
“Despite the increase in the debt-to-GDP ratio, the Eurobond proceeds helped the country maintain normal operations, finance the budget deficit, and invest in key national infrastructure. Additionally, these proceeds allowed Namibia to strengthen its external position by augmenting its stock of international foreign exchange reserves,” Shikoto said, adding that the move bolstered investor confidence in Namibia’s ability to meet its foreign obligations.
