Moody’s downgrades Namibia’s credit rating, but raises outlook from negative to stable

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Moody
Moody

Moody’s Investors Service has downgraded Namibia’s long-term issuer and senior unsecured ratings to B1 from Ba3, but changed the country’s outlook to stable from negative, according to a statement from the ratings agency.

“The B1 rating captures the economy’s reduced shock absorption capacity and the continued increase in the debt ratio projected over the next three years, to 75 percent of GDP in fiscal 2024,” the statement, issued on Tuesday, said.

It said that stagnating trend growth and income levels point to persistent social spending pressures, including mitigating the fallout from higher food and energy prices triggered by the Ukraine conflict, thereby increasing the risk of fiscal slippages.

The agency said large gross borrowing requirements at 20 to 30 percent of GDP and weakening debt affordability expose the credit profile to tightening domestic and external liquidity conditions to stem rising global inflation.

Moody’s said the stable outlook incorporates its view that Namibian government efforts will eventually prove effective in consolidating fiscal accounts over the next three years notwithstanding the rigid spending structure. Enditem

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