…public debt projected to rise to N$177bn
Namibia’s fiscal deficit is projected to widen to between N$15.8 billion and N$20.1 billion in the 2025/26 financial year, equivalent to around 6% of gross domestic product (GDP), as weaker revenue performance and mounting expenditure pressures weigh on public finances, according to Simonis Storm Research.
In its Economic Outlook for 2026, the research firm said the widening deficit reflects tightening fiscal conditions, with limited revenue growth expected to constrain government’s ability to manage rising spending demands.
The primary balance — which excludes interest payments on debt — is projected to weaken to roughly N$1.4 billion, signalling growing fiscal strain amid softer revenue collections and persistent expenditure obligations.
Public debt is forecast to rise to approximately N$177 billion in FY2025/26, representing about 60% of GDP and around N$4 billion higher than earlier projections.
While debt levels remain broadly manageable, the report cautions that sustained deficits could place additional pressure on Namibia’s fiscal trajectory over the medium term.
Simonis Storm noted that Namibia’s external debt exposure has declined significantly following the redemption of the country’s Eurobond and repayments to the International Monetary Fund (IMF). Foreign debt is estimated at N$25.6 billion, accounting for about 14.4% of total public debt.
“External exposure has moderated to 14.4% of total debt stock after foreign obligations declined to N$25.6 billion, reflecting repayments and the Eurobond redemption,” the firm said.
While the reduction in foreign borrowing lowers exchange rate risks, it has increased reliance on domestic financing. Domestic funding requirements are projected to widen to approximately N$26.3 billion, up from N$21.2 billion previously, placing greater pressure on the local capital market.
Investor appetite for government debt has also moderated, with average bond auction subscription ratios easing to around 1.8 times during 2024–2025, compared with levels above 3.0 times in earlier periods.
“Auction subscription ratios have eased toward 1.8 times, and demand is increasingly concentrated at the short end of the curve, reflecting investor caution,” Simonis Storm said.
On the revenue side, government has revised its FY2025/26 revenue forecast downward from about N$92.6 billion to N$89.4 billion. Mid-year collections reached roughly N$36.6 billion, representing about 41% of the revised estimate, below the historical mid-year benchmark of approximately 50%.
The firm warned that total revenue could still undershoot projections by between N$2.1 billion and N$4.3 billion, depending on final-quarter performance.
Expenditure pressures remain elevated, with the Medium-Term Expenditure Framework broadly flat in nominal terms, implying real spending compression once inflation is taken into account. Wages, statutory transfers, subsidies, guarantees and debt servicing collectively account for about 60% of total government expenditure.
Health and education spending together comprise nearly 30% of the budget, while debt service costs are projected to rise by almost 10% year-on-year to N$14.4 billion in FY2025/26, increasingly limiting resources available for development programmes.
Looking ahead, Simonis Storm said fiscal outcomes will depend heavily on revenue stabilisation, economic growth and expenditure discipline.
“If nominal GDP growth averages around 4–5% and deficits remain near 5–6% of GDP, the debt ratio could stabilise slightly above 60% but risks drifting toward 65–70%,” the firm cautioned.
