Namibia's debt too small for 3-tier system: Shafudah

07 Jul 2017 14:30pm
WINDHOEK, 07 JUL (NAMPA) – Namibia’s debt is too small to implement the international debt office structure of a front, middle and ba1ck office to deal with different aspects of the debt administration function.
Ministry of Finance (MoF) Permanent Secretary, Ericah Shafudah said this here on Thursday before the Parliamentary Standing Committee on Public Accounts during the public hearing on Public Debt Management within the MoF from 2012 to 2015.
The 2005 Sovereign Debt Management Strategy (SDMS) suggested by the Bank of Namibia (BoN) proposes a front office that would deal with the issuing of debt, a middle office to deal with the recording, debt analysing and risk management, while the back office would manage the settlement and payment of debt.
Shafudah was responding to questions posed by Chairperson of the committee, Mike Kavekotora on why the strategy is not yet fully implemented and functional.
Shafudah noted that the MoF is aware of the SDMS and is implementing it, but staff at the government agency is limited.
“We thought perhaps we can go slow in terms of having it as recommended and try to rearrange the few people that we have in the division to perform what would have been performed by the front office, middle office and back office,” she said.
Shafudah said this resulted in the BoN assisting the ministry with the administrative functions of the back office, while the ministry performs the functions of the front and middle offices.
“This is a short-term solution that was informed by the size of the debt by then. We still think that we are fine; it’s only that we can’t say we are 100 per cent because I also know that we have overloaded the staff members whom we have in the division but the work for the three offices is being performed,” said Shafudah.
She noted that in the long run and depending on the magnitude of Namibia’s foreign debt, the ministry is looking into increasing the number of staff members in that division by submitting a proposed structure to the Office of the Prime Minister and the Public Service Commission.
In a representation, 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 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 BoN has set the ceiling at 35 per cent.