Fitch downgrades Namibia’s credit rating from stable to negative

22 Feb 2019 15:30pm
WINDHOEK, 22 FEB (NAMPA) – The United States of America’s Fitch credit rating agency has downgraded Namibia’s credit risk outlook from stable to negative.
The rating released on 21 February 2019, affirmed Namibia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB+’.
The agency said the revised rating to negative reflects Namibia’s weak growth performance and the agency’s downward assessment of growth prospects with adverse implications for the government’s ability to stabilise the public debt trajectory.
Fitch projected a contraction of 0,4 per cent in 2018 compared to the previous forecast of 0,6 per cent, noting a decline in Gross Domestic Product (GDP) for the tenth consecutive quarter in quarter three of 2018.
“The contraction reflects weak domestic demand, due mostly to fiscal consolidation, lower private investment and soft disposable income growth, as well as sluggish activity in neighbouring South Africa and Angola.
This was only partly offset by robust activity in mining mostly due to the ramping-up of the Husab mega-mine’s production of uranium,” the ratings agency stated.
Fitch added that potential growth was also held back by persistent structural blockages which include low education outcomes and a business climate that is somewhat weaker than rating peers.
FirstRand Namibia Group Economist, Daniel Kavishe on Friday said it is unlikely that the country's rating will improve in the short-term unless extreme changes are made to create policy stability and a competitive investment environment.
“As social deficits widen, Government will have to pronounce itself on key legislature related to land reform, equitable economic empowerment and public sector governance to reignite investor confidence,” he said.
Through the improvement of the local business environment, Namibia will be set on a sustainable and steady path of economic recovery that entices both domestic and foreign investments, Kavishe said.