MOODY’S DOWNGRADES RATING OUTLOOK FOR NAMIBIA FROM STABLE TO NEGATIVE

International rating agency Moody's Investors Service has revised its ratings on Namibia's economy from stable to negative, reflecting a number of prevalent economic risk factors which need to be managed prudently, says Finance Minister Calle Schlettwein.

Moody's last week revised Namibia's credit risk outlook based on the country's poor policies to reduce the deficit and accumulated public debt.

Schlettwein said here Thursday the revised credit outlook emphasises the need for consistent, firm and credible policy response measures to address the emerging economic weaknesses.

In addition to rising public debt, Moody's credit ratings were also based on the risk of tighter domestic funding conditions; very high and persistent unemployment factors; and the high dependence on volatile Southern African Customs Union (SACU) receipts for foreign exchange earnings and government budget revenues.

Schlettwein noted with great concern that Namibia's domestic economy is facing liquidity constraints to finance elevated financing needs as a result of shocks on public finances.

He said the liquidity constraints in the market have been exacerbated by shocks of the economy and public revenue, and a wider budget deficit and financing needs.

External shocks to the economy were also a result of repeated downward revision in the global economic growth, a sudden fall in regional economy and close to no growth with Namibia's large trading partners such as South Africa and Angola.

Schlettwein added Government had already taken steps to address the identified weaknesses highlighted in the credit ratings assessments and expects improvements going forward.

"It is my expectation that asset managers who are responsible for managing the country's vast institutional savings would equally recognise this concerted policy implementation through investment in government securities going forward in line with the announced deficit reduction stance."

Source: NAM NEWS NETWORK