Chamwe Kaira
Fitch Ratings expects Namibia’s government debt to rise to 66% of gross domestic product (GDP) in the 2026 financial year, while interest payments are projected to consume 18% of government revenue.
The agency said government debt would remain above the ‘BB’ median of 54% while spending pressures continue to weigh on the country’s finances.
Fitch affirmed Namibia’s long-term foreign currency issuer default rating at BB- with a stable outlook, citing the country’s governance framework and financing flexibility. However, the agency warned that high fiscal deficits, rising debt and weak economic growth continue to pressure the sovereign rating.
The agency expects Namibia’s economy to grow by 1.6% in 2026 after estimated growth of 1.7% in 2025.
Fitch linked the weak outlook to softer global diamond demand, lower gold production and the impact of the Iran war on domestic demand.
Fitch said uranium production, construction activity and improved livestock production after the 2024 drought would help support the economy. Growth is expected to improve to 3.2% in 2027.
The agency said oil and gas exploration continues to support Namibia’s medium-term growth outlook, although progress has slowed while investors await final investment decisions on major projects.
Fitch expects TotalEnergies’ Venus offshore oil project to reach a final investment decision by the end of 2026, with production potentially starting between 2031 and 2032.
Despite this, Fitch said hydrocarbon production has not yet been included in its fiscal and growth forecasts because of uncertainty around implementation timelines.
On the fiscal side, Fitch forecast Namibia’s budget deficit would narrow slightly to 6.2% of GDP in the 2026/27 financial year.
The figure remains above both government targets and the projected ‘BB’ peer median of 3.5%.
The agency said spending pressures remain high because of recurrent expenditure, rising debt servicing costs, fuel subsidies linked to the Iran conflict and continued support for state-owned enterprises involved in infrastructure, housing and power projects.
Revenue collection is also expected to weaken. Fitch forecasts government revenue-to-GDP to decline to 30.1% due to lower diamond-related income and limited gains from tax reforms.
The agency said the recent reduction in the non-mining corporate tax rate from 30% to 28% may help attract investment, while the introduction of a 10% dividend tax could partly offset lost revenue.
Fitch also expects external pressures to increase. The current account deficit is forecast to widen to about 16% of GDP in 2026 because of rising fuel and fertiliser import costs.
Gross international reserves are projected to decline to 2.5 months of current external payments, below the ‘BB’ median of 4.7 months.
Despite the decline, Fitch said reserve levels remain sufficient to support Namibia’s currency peg to the South African rand. The agency added that the Bank of Namibia’s monetary policy stance continues to support the peg arrangement.
Inflation is expected to rise slightly to 3.7% in 2026 from 3.5% in 2025 because of higher imported fuel and fertiliser costs linked to the Iran war.
Fitch said government measures, including the temporary 50% fuel levy reduction until the end of June 2026, should help limit inflationary pressure.
The agency highlighted Namibia’s governance indicators as one of its rating strengths, giving positive environmental, social and governance (ESG) relevance scores for political stability, institutional quality, rule of law and control of corruption.
Fitch warned that Namibia could face a downgrade if government debt rises further, economic growth remains weak or external vulnerabilities threaten the sustainability of the currency peg.
The agency said stronger medium-term growth, especially from energy-sector investment, and meaningful debt reduction through fiscal consolidation could support future rating upgrades.
Fitch also noted that Namibia’s non-bank financial sector, with assets equal to about 182% of GDP at the end of 2025, continues to provide support for domestic financing needs.
