Namibia Junked by Fitch

Fitch Ratings announced that it had downgraded Namibia to junk status, two weeks after Finance Minister Calle Schlettwein delivered his mid-year budget review. Fitch’s downgrade also comes just over three months after Moody’s Investors Service junked Namibia in early August, AllAfrica reported. Fitch said its downgrade “reflects weaker-than-forecast fiscal outcomes and our projection that public debt-to-GDP will continue to rise over the medium term”. At the same time, Fitch mentions “a weaker-than-expected economic recovery and our view that medium-term growth has shifted to a lower gear” as additional concerns. The ratings agency predicts that Namibia’s GDP growth will decelerate to “0.8% in 2017 from 1.4% in 2016”. In its extensive statement on the downgrade, the ratings agency also points to the expected decline in transfers from the Southern African Customs Union as an influential factor, along with Schlettwein’s recent statements indicating that “fiscal consolidation was temporarily interrupted”. “The latest Medium Term Expenditure Framework, published earlier in November, projects general government debt to grow to 44.2% in FY19, while it was forecast to decline to 37.7% in the previous MTEF,” Fitch’s statement reads.