By Lot Ndamanomhata
The Government of Namibia, through the Ministry of Finance, released its Mid-Year Budget Review (MYBR) for the 2025/26 financial year, outlining key adjustments to the national borrowing and financing strategy in response to emerging fiscal pressures and a challenging global economic environment.
The report, presented by Minister Erica Shafudah on 21 October 2025, reaffirms the government’s commitment to fiscal prudence and economic stability amid slowing revenue growth and subdued domestic performance.
Fiscal Outlook and Macroeconomic Context
According to the MYBR, the national fiscal position has been strained by a combination of weakening global demand, lower commodity prices, and softer domestic activity.
Year-to-date, government revenue collection has slowed by 10 percentage points compared to the previous financial year (FY2024/25), primarily due to declining diamond sales, reduced VAT receipts, and lower income tax collections.
Despite these challenges, total expenditure is expected to remain within the approved threshold of N$106.1 billion, as government continues to meet operational and developmental priorities. However, the budget deficit has widened from N$12.8 billion to N$15.8 billion, reflecting reduced revenue flows against largely fixed spending commitments.
Revised Borrowing Requirements
To bridge this widening fiscal gap, the total borrowing requirement for FY2025/26 has been revised upward from N$29.8 billion to N$33.6 billion. This increase is driven largely by the revenue shortfall and additional obligations such as VAT refund repayments—particularly those accumulated in the oil and gas sector—which amount to approximately N$800 million.
The Bank of Namibia’s report details that domestic borrowing will take a greater share of the financing mix, rising from N$21.1 billion to N$26.3 billion, while foreign borrowing has been adjusted downward from N$8.6 billion to N$7.3 billion. The external component includes project financing from the African Development Bank (AfDB) and KfW, as well as ZAR-denominated loans from commercial banks, aligned with the government’s Eurobond redemption strategy.
Domestic Borrowing Progress and Market Performance
Between April and October 2025, the government successfully raised N$17.3 billion through the domestic market. This included:
- N$3.9 billion from Treasury Bills,
- N$11.8 billion from fixed-rate bonds, and
- N$1.6 billion from inflation-linked bonds.
Investor appetite remained robust throughout this period, with no shortfall in auction participation. In addition, two new inflation-linked instruments—GI31 and GI41—were introduced to diversify the securities portfolio and strengthen market confidence. Both bonds recorded average bid-to-offer ratios above 3:1, signaling strong investor interest and trust in Namibia’s sovereign instruments.
Borrowing Outlook for the Second Half of FY2025/26
Looking ahead to the remainder of the fiscal year (November 2025 – March 2026), the government plans to raise an additional N$9.0 billion domestically. The planned issuance will comprise:
- N$5.5 billion in fixed-rate bonds,
- N$1.1 billion in inflation-linked bonds, and
- N$2.5 billion in Treasury Bills.
The Ministry also intends to continue with bond switch operations, particularly on GC26 and GC27, to smoothen redemption pressures and enhance market liquidity. This proactive debt management approach aims to mitigate refinancing risks and maintain investor confidence. The auction allocation process will remain flexible to align issuance volumes with market demand, ensuring efficient and cost-effective execution of the borrowing plan.
Prudent Debt Management in an Uncertain Economy
The Bank of Namibia emphasizes that the updated borrowing plan is guided by a principle of prudence and sustainability. By increasing reliance on the domestic market while moderating external borrowing, the government aims to balance fiscal needs with long-term debt stability. Namibia’s debt management strategy continues to prioritize cost minimization, risk reduction, and market development, even as global economic headwinds persist.
Conclusion: Strengthening Fiscal Resilience Through Strategic Borrowing
The Mid-Year Budget Review FY2025/26 Borrowing Strategy reflects a deliberate and disciplined approach to fiscal management in an era of economic uncertainty. While revenue pressures have intensified, the government’s response—anchored in domestic market confidence, controlled expenditure, and diversified financing instruments—demonstrates its commitment to safeguarding fiscal stability and sustaining public investment.
As Namibia navigates a complex economic landscape, the success of this borrowing strategy will hinge on continued investor confidence, transparent debt operations, and robust macroeconomic reforms. In essence, this plan is not merely about managing debt—it is about preserving the country’s economic sovereignty and ensuring that every borrowed dollar contributes meaningfully to Namibia’s long-term development and resilience.
*Lot Ndamanomhata is graduate of Public Management, Journalism and Communication. This article reflects his views and writes entirely in his personal capacity.
