Fitch Ratings has confirmed Namibia’s Long-Term Foreign Currency Issuer Default Rating (IDR) at ’BB-’ with a stable outlook on Friday, 23 May 2025. This rating is backed by Namibia’s solid governance indicators, institutional framework, and fiscal financing flexibility supported by the large non-banking financial sector (NBFS). However, these are balanced against high fiscal deficits, government debt, large fiscal financing needs, and a rigid expenditure profile.
Fitch anticipates a slight recovery in real GDP growth to 3.8% in 2025, up from 3.7% in 2024. This is expected due to normalization of rainfall patterns, boosting agricultural activity, and the services sector will be strengthened by a pickup in tourism, and strong activity in transport and wholesale and trade. Additionally, a recovery in the uranium sector and higher gold production will support the economy, while diamond production is likely to be subdued due to lower prices. Oil and gas exploration have contributed to growth, but momentum is expected to slow by 2026 ahead of final investment decisions.
Inflation is expected to decrease to 4.0% in 2025 from 4.2% in 2024. The Bank of Namibia (BoN) has kept its policy rate at 6.75% after four rate cuts totaling 100 basis points since August 2024, reflecting concerns over renewed inflationary pressures. The policy rate is currently 75 basis points below the policy rate of South Africa. Fitch expects the BoN’s monetary policy to remain consistent with the sustainability of the long-standing peg arrangement of the Namibian dollar to the South African rand.
Government revenue is expected to face downward pressure due to weaker traditional revenue drivers, the diamond sector, and Southern African Customs Union (SACU) receipts. Diamond-related revenues fell below 1% of GDP in the fiscal year ending March 2025 (FY24), from about 2% of GDP in FY23, and a rebound is unlikely. SACU receipts are expected to fall by 24% in FY25, to 8% of GDP, compared to about 12% in FY24, with medium-term prospects uncertain.
Fitch anticipates a widening of the fiscal deficit to 5.0% of GDP in FY25, 0.4 percentage points higher than the general government’s (GG) budget target and the projected ’BB’ median of 2.8%. This follows slippage in FY24, when the deficit reached 3.9% of GDP, 0.7 percentage points higher than budgeted as expenditure growth outpaced revenue. Spending pressure will continue due to high social spending and debt servicing.