Moody's affirms Namibia B1 rating

PSG Konsult Namibia says the prospects of economic growth and debt stabilisation should stem any negative credit rating downgrades Namibia may face.

This follows the affirmation of Namibia's credit rating at B1 by Moody's ratings agency.

Moody's, in its analysis of Namibia, said the positive outlook reflects Namibia's improved growth prospects, which are supported by renewed investments in the mining and energy sectors, especially the nascent oil and gas and green hydrogen industries. The ratings agency, however, sounded a warning that the future of these promising new industries remains highly uncertain.

“The affirmation of the B1 rating captures the government's relatively high debt burden and elevated cost of debt compared to higher-rated peers, in addition to its comparatively large gross financing needs," Moody’s said.

"We expect continued robust economic growth and a stabilisation in debt levels over the medium term will stem the tide of credit rating downgrades that Namibia has faced since 2017."

The positive outlook from Moody's opens the door for a first credit rating upgrade next year. Namibia will have to continue to record strong economic growth in the short- to medium term, which depends on favourable external conditions for continued investment in mining and energy.

PSG said it expected economic growth to continue to be challenged by fiscal tightening as well as structural problems such as high unemployment, a large skills shortage and a lack of investment in value-added sectors.