Fitch Affirms Namibia at ‘BB-’ with Stable Outlook
Fitch Ratings has affirmed Namibia’s Long-Term Issuer Default Ratings (IDRs)at ‘BB-’ with a Stable Outlook. Namibia’s ratings are supported by strong governance indicators and an institutional framework relative to rating peers.
The country’s credit rating is also supported by fiscal financing flexibility underpinned by a large non-bank financial sector, with assets of about 191% of GDP at end-June 2026.
These strengths are balanced against high fiscal deficits and government debt relative to peers, large fiscal financing needs and a rigid expenditure profile.
Fitch expects Namibia’s real GDP growth to pick up to 2.1% in 2026 from 1.7% in 2025 but remain below the projected ‘BB’ median of 3.5%.
Namibia’s growth accelerated to 4.0% yoy in 1H26, but we expect growth to moderate in 2H26 amid continued mining weakness, recent foot and mouth disease, climate-related risks and spillovers from the Iran war.
“We assume the Iran war continues until 1Q27, when we expect a durable deal to re-open the Strait of Hormuz. A more prolonged conflict could significantly raise inflation and weigh on reserves and growth”.
Rating analysts forecast growth will strengthen to 2.7% in 2027 as temporary challenges ease. Oil and gas exploration supports growth prospects, although momentum has slowed since 2025 pending final investment decisions (FID).
Fitch expects TotalEnergies’ Venus project to reach FID by end-1Q27, with production starting in 2031-2032 at an estimated 150,000 barrels per day (b/d), while its Mopane project could add more than 200,000 b/d following the FID targeted for 2028.
Ratings analysts said they have not factored the potential impact of hydrocarbon projects into our growth and fiscal projections given their long and uncertain implementation timelines.
Sustained mining investment should support medium-term growth, although water and electricity supply constraints pose risks.
Fitch expects the budget deficit to narrow to 5.8% of GDP in the fiscal year ending March 2027 (FY26), but 0.3pp above the government’s 5.5% target and well above the projected ‘BB’ median of 3.3%.
“We project general government revenue to fall by 2.4pp to 29.3% of GDP, in line with the government’s revised forecast of NAD88.1 billion, driven by weaker mining receipts and lower administrative fees, and further to 28.2% of GDP in FY27,
“…underscoring a narrow and volatile revenue base reliant on commodity-related and Southern African Customs Union (SACU) receipts”. Nonetheless, it will remain above the projected ‘BB’ median of 26%.
Ratings analysts expect expenditure to fall in response to lower revenue, but remain high. Operational spending is constrained by high public sector wages, strong support for state-owned enterprises and rising interest costs, with the interest/revenue ratio rising to 17.8% in FY26, above the ‘BB’ median of 11.9%.
Fitch said non-priority capex will also adjust, following weak capex execution of 42% at end-1HFY26. Ample bank and non-bank financial sector liquidity and strong demand for government securities, partly driven by the domestic asset-holding requirement, support domestic financing flexibility.
The authorities are pursuing revenue mobilisation measures, including digitisation and improved compliance, but analysts expect limited gains.
The planned cut in the non-mining corporate income tax rate to 28% from 30%, effective 1 January 2027, should support private investment, while a planned 10% dividend tax is expected to offset about 90% of the associated revenue loss.
Delayed adjustments to individual income tax brackets will provide temporary support through fiscal drag. The authorities expect SACU receipts to rise about 9% in FY26 to NAD24 billion, or 8% of GDP, below their FY23-FY25 average of about 10% of GDP.
Fitch expects general government debt to rise to 66% of GDP in FYE26 from 64.6% in FYE25, driven by domestic borrowing to finance the deficit, and to remain above the ‘BB’ median of 52%.
With the primary deficit below 1% of GDP, interest costs account for a large share of the overall budget deficit, underscoring fiscal rigidities. A high local-currency debt share of about 90% and predominantly multilateral external debt, largely denominated in South African rand, mitigate debt vulnerabilities.
Rating analysts project the current account deficit to widen by 2.6pp to 15.7% of GDP in 2026 driven by higher fuel costs and lower mining receipts. About 40% of fuel imports originate from GCC countries.
External financing risks are mitigated by FDI linked to hydrocarbon projects. We forecast gross reserves will rise to USD3.7 billion by end-2026, supported by higher monetary gold purchases following the Bank of Namibia’s (BoN) gold purchasing program, covering 3.4 months of current external payments, albeit below the ‘BB’ median of 5.2 months.
Nonetheless, Fitch analysts said they expect reserve coverage to remain consistent with the peg’s sustainability. “ We expect average inflation to rise to 4.3% in 2026 from 3.5% in 2025, reflecting moderate exposure to higher imported fuel prices arising from the Iran war”.
Ratings analysts said exchange rate gains should pass through, but a prolonged conflict would add risks. The BoN resumed tightening in June 2026, raising the policy rate by a cumulative 50bp to 7% to support the exchange rate peg. Tinubu Flags Off $3.5bn Bakassi Deep Seaport Construction
