Question

In October 2019 FITCH further downgraded Namibia’s long-term non-Rand foreign currency bonds from BB+ sub-investment grade assigned in 2017 with a negative outlook, to a BB sub-investment grade, with a stable outlook. Discuss the key drivers of FITCH negative outlook?

Answer 1

Namibia's economic and public finances negative Outlook is a significant of coronavirus pandemic. Namibia's GDP has fallen by an average of 0.2% each year in 2016 to 2019. As fall in the global demand for luxury goods and manufactured inputs leads to less export of diamonds and other mining products. Border closure with the neighbouring countries are also affecting trade and tourism.

Temporary easing in monetary and fiscal policy may help to recover this loss. Economic weakness and currency depreciation has led to fall in GDP per capita in term of US dollars.  

As from sources Namibia reflects stable and peaceful political transition, strong institutional capacity, effective role of law, and low level of corruption.