- General News
- Published Date
- Nyasha Francis Nyaunwa
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Confident that the budget deficit will ease to 4.6% of GDP in the 2012/13 budget, government says it has ruled out another Eurobond, in the short term.
Government estimates a negative balance of N$4.7 billion according to the 2012/13 budget announced last week, and with the success of Namibia’s debut Eurobond which was oversubscribed five and a half times at a time of global market turmoil, analysts believed government would pursue another international bond.
Moreover, the Eurobond proved to be relatively cheaper compared to domestic bonds over the same period. Namibia will pay a coupon rate, or interest rate, of 5.5% on the Eurobond which is cheaper than the 7.75% government currently pays on domestic ten-year bonds.
However, Finance Minister Saara Kuugongelwa-Amadhila said in an interview recently, government has made a conscious decision to borrow mostly from the domestic market in order to utilise domestic savings and develop the local capital market.
“The bulk of our borrowing is from the domestic market. We have made a decision that we should borrow the bulk of our money from the local market to utilise local savings and to promote the development of our capital market. The development of our capital market is important to ensure that the cost of borrowing goes down,” the Minister said.
She said government will be borrowing from bilateral sources for further funding, although she couldn’t reveal the countries targeted. Kuugongelwa-Amadhila added that government had planned for a bond to be issued on the South African market for a small amount but that was now dependent on the spending patterns of the different Ministries before the current financial year ends on 31 March.
“We had planned for a bond to be issued on the South African market for a small amount. That was supposed to have been issued this year if all the money allocated had been spent (which was not the case) but we still have another month to go.”
The total budget execution rate for 2011/12 was 96.9% while the operational budget execution rate was 97.7% and 92% for the development budget.
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