8 January 2013

Namibia: Fitch Affirms Namibia's Credit Rating With a Stable Outlook

Windhoek — The global ratings agency, Fitch Ratings, has affirmed Namibia's credit rating at BBB-. The rating is for a stable outlook and defines the country as satisfactory at the moment.

The somewhat negative BBB- rating has not dampened the spirit of the government with the Ministry of Finance saying it would continue to forge ahead with reforms that would lead to a positive outlook.

"The affirmation of Namibia's sovereign rating reflects the government's commitment to fiscal prudence and good macro-economic policy management," said a statement released by the finance ministry yesterday.

Key factors that contributed to Namibia's rating include the level of government debt, which is relatively low at 26 percent of Gross Domestic Product (GDP), as well as the fact that Namibia is a net external creditor equivalent to 8.2 percent of GDP thanks to past current account surpluses.

"Government commits to a fiscal consolidation process in order to keep the budget deficit and debt stock at a sustainable level in the medium-term.

The budget deficit is estimated to narrow reaching 0.4 percent of GDP at the end of the Medium Term Expenditure Framework (MTEF) as a result of the consolidation process," said the Ministry of Finance.

Additional key factors for the rating is that Namibia's economic growth prospects remain positive with a forecast average GDP growth rate of above four percent between 2013 and 2015, as well as the fact that the country continues to attract foreign direct investment flows, particularly in the mining sector.

Some of the reforms that government continues to push forward with to improve Namibia's rating include sustaining the fiscal consolidation process to deliver stabilisation in the debt level, maintaining macro-economic stability with strong GDP growth and broader socio-economic development and implementing fiscal reforms to lessen the country's dependence on SACU (Southern African Customs Union) receipts.

The government intends achieving this through strengthened revenue management, compliance and improved efficiency of the tax administration regime.

The agency visited Namibia during the second week of November last year as part of the annual review of the country's credit rating.

Discussions took place with various institutions, including government ministries, diplomatic missions, non-governmental organisations, as well as public and private institutions.

After these consultations the Fitch Ratings Committee met in London on December 04 to discuss the review report and consequently affirmed Namibia's BBB- rating.

Fitch Ratings is dual-headquartered in New York and London with over 50 offices worldwide.

Fitch Ratings' global expertise draws on local market knowledge and spans across the fixed-income universe.

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