THE N$8,1 billion Covid-19 economic stimulus package has put government in a very tight financial position.
Analysts say the treasury will have to postpone paying off some debt to save money.
The Ministry of Finance announced last week that some of the promised stimulus package funds would have to be retrieved from savings meant to repay loans.
This includes an N$8 billion sinking fund intended to be used for redeeming three bonds which will mature between April 2020 and November 2021.
"A portion of these savings will be utilised now. Arrangements will be made in the next two years to rebuild these savings and manage the debt redemption liabilities," finance ministry spokesperson Tonateni Shidhudhu said.
According to Moody's rating agency, the two rand-denominated bonds maturing this year and next are valued at N$4,5 billion, which will require redeeming from treasury.
Funds will be needed for the U$500 million (N$9,5 billion at the current exchange rate) Eurobond maturing next year as well.
Bruce Hansen, the managing director at Simonis Storm Securities, said the current Covid-19 crisis takes precedence over anything else, and tapping into the sinking fund makes sense.
"Finding reserves is important to avoid the unnecessary increase of debt, and dipping into this fund would be part of it," Hansen said.
He added leniency will be given where required, which would allow the opportunity for the rollover of debt or a grace period.
The International Monetary Fund and the World Bank Group have already called for a suspension of interest on debt for developing countries.
Given the number of loans to be repaid and the short period in between, Hansen explained the central bank is more likely to switch maturing bonds into longer term bonds.
He said the central bank has already switched the GC18 bond to a long-term bond. It has also done the same with the GC20 and GC21 which are about to be redeemed.
"This is to prevent having to pay out large redemption sums immediately," Hansen said.
He indicated currently around N$773 million is outstanding on GC20, but there will be a last switch auction on redemption day to minimise payout as far as possible.
"Switching is not the ideal solution, but a short-term option that shifts debt to the long term will have to be faced sooner or later," he said.
Eden Shipanga, economics lecturer at the Namibia University of Science and Technology, said: "The government faces an economic dilemma. On the one hand, it faces an impending double digit decline - especially with the current Covid-19 outbreak. On the other hand, our economy has not grown for the past three years."
He said it was clear the government's constraints and lack of sufficient savings in its reserves make it difficult to avoid dipping into the N$8 billion fund that was earmarked for debt redemption.
"The maturity of some of these bonds are on the horizon. During times of the market not being liquid, rollover risk appears to be particularly relevant," he said.
"As a consequence, potential rollover losses arising from an illiquid market are realised," he said.
Shipanga said the world's biggest economies may roll over US$8,7 trillion of debt maturing this year, so Namibia is no exception.
According to him the government will have to maintain a balance - hence the private sector needs to come to the party.
Eloise du Plessis, lead researcher at PSG Wealth Namibia, said Namibia is in no way economically unaffected by what is happening globally.
"Governments everywhere are borrowing a lot of money and making tough choices to respond to Covid-19. Namibia is no different. Some help will come from outside as well, like the US$121,7 million from the African Development Bank for water and sanitation," she said.