Finance Ministry questioned over foreign debt
06 Jul 2017 17:40pm
WINDHOEK, 06 JUL (NAMPA) The Parliamentary Standing Committee on Public Accounts has questioned why the Ministry of Finance did not monitor and assess risks in foreign debt transactions, while no risk assessment documents could be provided from 2012 to 2015.
At a public hearing on Thursday regarding reviews of the Auditor-Generals Reports on the Performance Audit on the Public Debt Management, it surfaced that the ministrys Cash and Debt Management (CDM) division did not have staff dedicated to the risk assessment, while the proposed structure was not approved at the time of audit.
Risk assessment ensures that the size of debt in relation to the size of the economy remains sustainable and is therefore a crucial function in effective debt management, said committee Chairperson, Mike Kavekotora.
The committee noted that the review uncovered a number of issues for which further explanations are required.
Kavekotora said Namibias external debt breached the stipulated benchmarks due to an out-dated debt management strategy, which resulted in Government not ensuring that Namibias debt portfolio is within the outlined strategic benchmark.
In a representation, Finance Ministry Permanent Secretary Ericah Shafudah said the benchmark for debt, during the period in question and as a ratio to Gross Domestic Product (GDP), was about 35 per cent.
She said it was reduced from 34 per cent during 2012/13 to 32 per cent in 2013/14 and 2014/15.
The economic activities of a particular year could affect the ratio between GDP and the debt as it plays a crucial role between the two, however despite this, the risk management team is still doing very well in advising as they are supposed to, she explained.
The median average of the ratio of foreign debt to GDP is 40 per cent for countries like Namibia and the Bank of Namibia has set the ceiling at 35 per cent.