WINDHOEK, (Xinhua) --
A number of Namibian economic experts have said
the recent Fitch downgrade of the country’s economic outlook was
announced last week that they had downgraded Namibia’s economic
outlook from stable to negative, as the government debt leaped
from 23.2 percent in 2014 and to a forecasted 39 percent of GDP
by the end of 2016.
It also cited
falling Southern African Customs Union revenue and the 10-year
750 million Eurobond Namibia got in 2015, and the dwindling
Some of the reasons
the rating agency gave was the proposed New Equitable Economic
Empowerment Framework that would entail that companies give 25
percent shares to previously disadvantaged Namibians amid a
widening budget deficit, which progressed from 0.1 percent in
2012 to 3.4 percent in 2013, and again to 6.4 percent in 2014.
Fitch said although
the proposed economic law lacks details, it is likely that
parliament will approve it thereby causing “some unease in the
business community and could slow down foreign investment in
manufacturing and services”.
Already a number of
organizations have advised the government to abandon the
proposed economic law, with employers and businesses saying it
will adversely affect foreign investors.
Suta Kavari, who is
with an investment firm, the proposed new economic law has led
to a slowdown in foreign investments.
Kavari said the
slowdown will continue if there is still uncertainty over the
proposed new economic law and if the government pushes on to
Presidential Economic advisor John Steytler said Fitch’s views
on the proposed new economic law were premature since a
consultative process is underway.
He said the rating
was expected because globally the economies are slowing down.
“We’re not entirely
surprised that this happened, knowing that globally there have
been a lot of headwinds. Some countries have lost their credit
ratings, so we’re glad that we remain creditworthy and able to
borrow at good rates,” Steytler said.
Steytler, there is no need to worry because the rating is a
“normal cycle the entire world is going through”.
“It would’ve been
worrying if the global economy was positive, while ours is
negative. What is happening here is a trend of the global
economy outlook,” he said.
Purvance Heuer, a
director with a research firm based in Windhoek, said the rating
was expected especially considering that Namibia is an emerging
or commodity-exporting economies like South Africa have been
experiencing the wrath of low commodity prices that exerted
pressure on exports revenue and fiscal position,” Heuer said.
Calle Schlettwein concurred, saying Namibia as a small growing
economy is buffeted by the prevailing global slowdown.
minister said, does not exist in a vacuum and that the situation
in Angola as well as the depressed commodity prices contributed
to the economic outlook downgrade.
“In this more
challenging environment, one cannot expect to see the strong
revenue growth of the 2012-2014 period repeated in the coming
few years,” Schlettwein said. “We need to be careful in handling
cases in our economy, such as wage negotiations.”
Brown said the current situation was foreseeable and should have
been avoided, while urging the government to take the rating as
a warning and heed the views of analysts who have been warning
about the impending issue for more than a year.
“A ratings downgrade can still be avoided, but extremely tough
decisions are needed from the fiscus and the government as a
whole to ensure this does not materialize,” he said.