5 July 2012

Namibia: Domestic Govt Debt Increases in June

Windhoek — After a slight decrease in May, domestic government debt increased by N$154 million in June to around N$17,5 billion.

This is broken down into Treasury Bills at N$8,027 billion and Internal Registered Stock at N$9,507 billion, Bank Windhoek group economist and industry advisor Rowland Brown said in a statement issued on Wednesday.

From May to June, domestic debt in Treasury Bills decreased by N$1,8 million due to a slight reduction in outstanding Treasury Bill (TB)-91s, from N$643 million to N$641 million.

Treasury Bills are short-term investment instruments issued by the government for 91, 182 or 365 days on a discount basis. At the same time, he said, Internal Registered Stock increased by N$156 million from N$9,351 billion to N$ 9,507 billion.

This increase was due to a N$50 million increase in government bonds, specifically GC14s. It included a N$60 million increase in GC17s, and a N$45.8 million increase in GC21s.

The GC12s and GC14s will mature over the next two years, with the GC12s set to mature on October 15, 2012 and the GC14s maturing on July 15, 2014. The total outstanding amount for these two bonds is N$1,38 billion in GC12s, and N$1,36 billion in CG14s.

"The change in debt levels, year-on-year, for June 2012 is approximately 39 percent. Current domestic debt levels are around 20 percent of the Gross Domestic Product (GDP)," Brown said.

The latest external debt figures available (fourth quarter of 2011/2012) show that Namibia's external debt commitments are approximately N$7,5 billion, slightly down on the third-quarter level of N$7,9 billion, Brown further noted.

As such, total government debt is currently thought to stand at approximately N$ 25 billion or 27 percent of the GDP, excluding contingent liabilities. According to the latest budget speech delivered by Minister of Finance Saara Kuugongelwa-Amadhila in February this year, debt levels are expected to peak in 2013/14 at approximately 30 percent of GDP, before returning to approximately 28 percent in 2014/15 due to fiscal consolidation.

According to Brown, the Namibian Eurobond continues to perform well, with yields of approximately 5,1 percent, significantly below the coupon rate of 5,5 percent, indicating a fairly strong market demand.


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