- Central bank says full amount for Eurobond redemption secured
- Economists hail move as boost for Namibia’s credibility and fiscal discipline
WINDHOEK, NAMIBIA – Namibia has raised the full $750 million (NAD13.5bn) needed to redeem its Eurobond due in October 2025, a milestone the central bank says reinforces the nation’s commitment to sound debt management.
Bank of Namibia (BoN) Governor Johannes !Gawaxab said the funds were mobilised in line with the country’s sovereign debt strategy, assuring investors of the government’s strong fiscal standing.
“We have mobilised the full amount and that mobilisation is within the sovereign debt management strategy of the central bank,” !Gawaxab said during the bank’s latest monetary policy announcement.
“For investors out there, this redeeming underpins the sovereign’s commitment to ensure our credit worthiness,” he added.
Debt discipline and market confidence
The Eurobond, first issued in 2015 to fund Namibia’s development needs and support the national budget, will mature on 29 October 2025. Financial analysts say the country’s ability to repay the bond on time without seeking renegotiation sets it apart from peers struggling with mounting debt.
Namibian economist Klaus Schade said the repayment marks a significant step in restoring investor trust in the country’s fiscal management.
“Reduced debts will result in reduced costs to servicing the debt and hence more funds available for operational expenditure or, ideally, for capital expenditure that provide a return on investment in the future,” Schade told Allen Dreyfus.
He added that lowering debt levels will strengthen confidence among both domestic and international investors.
“It improves Namibia’s macro-economic framework and attractiveness for investors,” he said.
While nations such as Zambia and Argentina have been forced to restructure their sovereign debts due to payment difficulties, Schade said Namibia’s ability to honour its Eurobond obligations on schedule reflects long-term planning and fiscal discipline.
“The timely repayment of the Eurobonds indicates long-term planning on the side of the Namibian government and the allocation of foreign reserves to the fund as well as fiscal discipline,” he said.
Reserves and domestic market implications
However, Schade cautioned that the move would likely reduce Namibia’s foreign exchange reserves, which could slip from about four months of import cover to the international benchmark of three months.
“The foreign reserves are expected to decrease to the international benchmark of three-month import cover from about four-month import cover prior to the redemption,” he said.
He also warned that plans to refinance around $115.6 million (NAD2 billion) through the domestic market could tighten liquidity and affect private sector borrowing.
“This could put pressure on the liquidity of the domestic market and could crowd out private sector investors that are dependent on the domestic financial market,” Schade added.
With the redemption deadline drawing near, Namibia’s commitment to repay its Eurobond without restructuring underscores its growing reputation for financial prudence at a time when many developing nations are battling debt distress.
