International rating agency, Moody's Investors Service, has affirmed Namibia's long term foreign currency credit rating at Ba2 but changed the outlook on the rating to negative from stable.
Moody's said in a statement on its website that the negative outlook reflects the economic and financial pressures the coronavirus shock is exerting on Namibia's credit metrics, exacerbating existing vulnerabilities.
Moody's further forecasts real GDP to contract by around 7% this year, recovering to growth of 1.8% in 2021. Local economic analysts expect that a positive rating action from either Fitch or Moody's is unlikely in the coming 12 months, adding that risks to the country's sovereign credit ratings are still skewed to the downside.
Eloise du Plessis, Head of Research at PSG Namibia said the COVID-19 crisis severely strains the government's ability to meet rising expenditure needs and to repay external debt in coming years without taking on more debt.
"Although economic growth is expected to recover modestly over the medium term, it will be hampered by fiscal consolidation efforts, structural problems such as high unemployment, a large skills shortage, a lack of investment in value added sectors, and ongoing global trade tensions," du Plessis said.