Namibia to pay ratings agencies N$10m, trims national budget

Fitch revised Namibia’s economic outlook from stable to negative, warning that the country’s debt security had become riskier

Following release of the 2019/ 2020 budget figures, The Namibian government plans to pay more than N$10 million to ratings agencies, Moody’s Investors Service and Fitch Ratings Inc. in the financial year ahead.

Fitch is set to be paid N$5.3million, while Moody’s is to receive N$4.7million from the government during the 2019/20 financial year. The payments to the two ratings agencies are classified as membership fees and subscriptions in a budget document prepared by Namibia’s Ministry of Finance.

The two American ratings agencies are used to measure the creditworthiness of borrowers, companies and governments, using standardised ratings to determine how much investors could lose in the event of borrowers failing to pay loans back.

Earlier this year, Fitch revised Namibia’s economic outlook from stable to negative, warning that the country’s debt security had become riskier, while Moody’s rated the government ‘s debt as speculative, last year-reflecting that although there were improving prospects for economic growth, the country was still considered a risky borrower.

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The 2019/20 budget figures also show that the government expects to increase payments to international and local national organs, excluding state-owned enterprises, to N$15 billion from N$13,7 billion allocated last year.

Last year, The Namibian treasury had set a deadline of April 2019 for pubic enterprises to start making money, or cut down on excess costs, including salaries.

According to Namibian finance minister, Calle Schlettwein, public enterprises needed to demonstrate that they were delivering value for money in the delivery of goods and services to the public, who were effectively paying taxes to subsidise state-owned enterprises.

Air Namibia is set to receive nearly half of the funds allocated to SOEs, with N$499,9 million earmarked for the loss-making national airline.

The Namibia Training Authority was allocated N$421 million during 2019/20 – an increase of 350% from the N$93 million it was given in the previous year.

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The Namibian College of Open Learning (Namcol), which received N$150 million in state funding in 2018/19, was allocated N$100 million in 2019/20.

Funding for the Namibia Students Financial Assistance Fund (NSFAF) is also set to be cut in 2019/20, to N$1,14 billion from N$1,45 billion in 2018/19.

Funding for the Development Bank of Namibia would also decrease in 2019/20 to N$51 million, compared to N$80 million the previous year.

The Namibian Broadcasting Corporation will receive N$140 million in 2019/20 – the same amount allocated to it in the previous year – while the Namibia Press Agency (Nampa) is set to receive N$15 million, the New Era Publications Corporation N$10 million, and NamZim, which publishes the weekly The Southern Times newspaper, will get N$5 million.

The state-owned mining and exploration company Epangelo Mining was allocated N$7,5 million, down from N$12 million in the previous financial year, while the Roads Contractor Company was allocated N$20 million.

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Public enterprises omitted from budget allocations include the Agro-Marketing and Trade Agency (Amta), TransNamib, the Namibia Airports Company (NAC) and the scandal-hit SME Bank. The Namibia Revenue Authority (Namra) was allocated N$140 million, and is expected to be operational in October 2019. The Government Institutions Pension Fund is to receive N$350 million – an increase of more than double from the N$145 million allocated in the previous year’s budget. The public enterprises governance bill was approved by the National Assembly and reviewed by the National Council. Its passing is expected to enable a review of many of the current public enterprises, with the objective of making them economically viable enterprises.

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