Moody’s Affirms Namibia’s B1 Ratings, Maintains Positive Outlook

Moody’s Affirms Namibia’s B1 Ratings, Maintains Positive Outlook

Moody’s Ratings has today affirmed the Government of Namibia’s B1 long-term foreign currency and local currency issuer ratings and maintained the positive outlook.The global ratings agency analysts also affirmed Namibia’s foreign currency senior unsecured debt rating at B1.

The positive outlook for Namibia, in place since April 2024, continues to reflect the prospects for improvements in its fiscal profile, growth trajectory, and external liquidity buffers, the rating note said. 

Moody’s said the return to primary surpluses since fiscal 2023 ending in March 2024 has stabilized the debt burden and, if sustained, will set it on a downward path, reducing future gross financing needs, which are otherwise elevated.

While the credit prospects remain positive, the effectiveness of fiscal and governance reform in maintaining the momentum will be tested by a slowdown in commodity and Southern African Customs Union (SACU) revenue.

Moreover, continued foreign direct investments (FDI) in existing uranium and gold mining industries, as well as in new hydrocarbon and renewables sectors, would bolster growth prospects and fortify foreign exchange reserve buffers, mitigating the decline in the diamond sector, the rating note stated.

Moody’s said in turn, this would bolster medium-term growth and external stability. The affirmation of the B1 rating is driven by the government’s high debt costs and burden, along with significant financing needs, which expose Namibia’s credit profile to potential fiscal deterioration.

Large FDI inflows fully finance the double-digit current account deficit, reducing external vulnerability risks. Meanwhile, entrenched social inequalities including high unemployment rates and weak access to basic services for large parts of the population, remain a constraint on the rating.

Namibia’s local-currency ceiling remains at Baa3 and incorporates a four-notch gap with the sovereign rating. The strong predictability of institutions and contained domestic and geopolitical risk support the business environment, as does the limited footprint of the government in the economy.

The foreign-currency ceiling remains at Ba1, a one-notch difference with the local-currency ceiling, and reflects limited transfer and convertibility risks, taking into account Namibia’s participation in the SACU with a high degree of trade and financial integration, supported by an adequate foreign exchange reserve buffer.

Moody’s stated that the positive outlook reflects the prospects for a more resilient fiscal profile, as well as an improved growth trajectory and robust external liquidity buffers.

Since fiscal 2023, the government has posted average primary surpluses of 1.8% of GDP, the first surplus readings since 2012. This turnaround was driven mainly by a revenue surge supported by a mining-led economic recovery and a sharp increase in SACU receipts, alongside strict wage bill controls.

“After stabilizing at around 67% of GDP, we expect the debt ratio to fall to 62% of GDP by end of this fiscal year driven by the redemption of the $750 million Eurobond in October 2025, pre-financed by a $625 million sinking fund”.

Moreover, Namibia’s growth prospects have strengthened, with a projected trend growth of 3.2% between 2025 and 2029, boosted by FDI in mining and the exploration of hydrocarbon and renewable energy opportunities.

The expansion in the uranium and gold sectors, for instance, could mitigate the decline in the diamond industry, which contributes up to 10% of GDP and 20% of exports.

The government’s ongoing adoption of a strong governance and resource management framework could help attract further private investment and ensure balanced resource use.

However, set against broad positive momentum, fluctuating commodity prices and a worsening trade environment will likely reduce SACU revenue by 3% of GDP in fiscal 2025 and keep it low for the next two years.

This will challenge the government to uphold primary surpluses as outlined in its medium-term plan.

The government’s efforts to address spending rigidities resulting from a high wage bill and support for state-owned enterprises, and the implementation of tax reforms to broaden the revenue base, would likely help the government better manage the volatility in SACU revenues.

Moody’s said the affirmation of the B1 rating is driven by the government’s high debt costs and burden, along with substantial funding needs, which render Namibia’s credit profile particularly susceptible to fiscal deterioration.

At respectively 5% and 62% in fiscal 2025, Namibia’s interest-to-GDP ratio and debt-to-GDP ratio are high compared to peers. Gross financing needs are large at 20% of GDP annually, driven by rollover needs.

Persistent social inequalities and a high unemployment rate at 19% in 2024 continue to weigh on the rating, even though these constraints could ease over time if new, largely foreign-funded industries drive local growth through improved skills and expanded mining value chains.

Namibia’s large domestic funding base, including insurance companies and pension funds, mitigates government liquidity risk.

Substantial FDI inflows fully cover the double-digit current account deficit, boosting foreign exchange reserves to $3 billion by August 2025, sufficient for 3.7 months of imports, or 4.5 months excluding externally financed oil and gas imports. Access Holdings Falls as Investors React to Update on Earnings