PSG maintains to rate Namibia a notch below investment grade
March 8, 2018, 5:04pm
PSG Namibia has maintained its rating of BB+, one notch below the investment grade with a negative outlook in its latest economic quarterly report.
This follows the firm’s decision to downgrade Namibia’s sovereign credit rating by one notch and maintain a negative outlook in November 2017, due to a rapid rise in public debt levels, a deterioration in the short- to medium- term growth outlook and the reduced credibility of the government’s financial management and commitment to fiscal consolidation.
“Our negative outlook on the “BB+” rating implies an increased risk of lower-than-expected economic growth and higher- than-expected public debt levels over the coming 12 months, which could trigger a further downgrade. However, if growth recovers meaningfully and fiscal prudence is restored we could change our outlook back to stable,” maintains the firm.
Weakening confidence in Namibia’s financial management capabilities due to the government's issues with backlogged payments, increasingly market- unfriendly policy proposals and generally weaker regional growth which had a significant impact on the government’s Southern African Customs Union (Sacu) revenues, contributed to the loss of investment grade status.