The news that Moody’s rating agency in New York had downgraded Namibia’s long-term senior unsecured bond ratings on Friday was met with shock and apprehension by the general Namibian public.
The intention of the downgrade was precisely that – to shock and subdue.
Many people are rightly concerned about what it means for their families, for the country as a whole, but we should all take a deep breath before we overreact to the opinions of distant people who do not share our interests, or our problems.
As a country, we have been through far greater trials, and with prudent planning, frugal use of our resources and determination we will pass through this one.
In brief, the bond ratings downgrade means that it will cost the government more to borrow on the world market, as its bonds are now rated as a more risky investment at Moody’s Ba1 grading – which according to their rating system is “a speculative grade bond”, or in common parlance: junk bonds.
Many institutional investors are legally bound not to invest in bonds rated as junk. Those that do, demand higher returns for their investment.
Thus, the ratings system is part of the chain of international debt bondage, by which higher profits are squeezed out of poorer countries and by which the developmental plans and aspirations of these countries are subdued and curtailed.
The fact that Namibia has not defaulted on any single scheduled debt repayment to date – at least not since 1984 – appears not to have affected Moody’s assessment.
The question we should ask though is whether Moody’s view is an entirely objective assessment, or whether the vested interests of the bankers, hedge fund managers, speculators and their financial advisers that stand to gain from higher profits on debt repayment have any role in shaping their purportedly ‘negative’ outlook on Namibia.
Moody’s analysts say, for example, that Namibia’s “vulnerability to shocks has recently risen” and then proceeds directly to apply a major shock to the economy in the form of a sudden downgrade.
It is clear from Moody’s prescription that the financiers on whose behalf they speak are in fact calling for greater austerity measures and deeper budget cuts to be imposed by the Namibian government on an already burdened population.
In the fashion of outmoded psychiatry – the doctors propose to cure the patient by liberally applying shocks to the body and brain. There is no evidence that this has helped in the past.
They demand more budget cuts from us to win the favour of the Wall Street analysts and bankers, but inevitably, at home the burden of these cuts tend to fall on the most vulnerable, on those who most need social welfare, healthcare, housing, education, on those whose voices are rarely heard.
The ratings agency said one key reason for downgrading Namibia’s bond credit rating had to do “with a sizeable increase in the country’s wage bill,” which amounted to 40% of total expenditure in 2016/17.
High wages for African workers is an idea that has long been frowned upon in the West.
What the bankers and their advisors in New York are in effect saying is they want the government to enforce lower wages, or to suppress wages – despite the fact that wages here lag far behind the western world. This is a difficult proposition in itself and pregnant with social conflict and disaster.
The measures demanded by Moody’s are difficult to impose politically on a population intent on protecting by any means necessary the gains they have made, and would be even more painful economically, because it means cutting services to the bone – in a country rated as one of the most unequal in the world.
To the casual observer, Moody’s is in effect demanding of the country to commit collective economic suicide, or at least the culling of a large section of society, as that seems the only thing that would satisfy the bankers in New York.
As the ‘structural adjustment programmes’ imposed on sub-Saharan countries by the World Bank and IMF did in the 1980s and 90s, there is no doubt that if implemented to the letter, these added austerity measures prescribed by Moody’s would further reduce the quality and length of life of people in Namibia.
So, before one goes worshipping at the feet of these distant but all-knowing analysts and speculators, it is necessary to take stock of the fact that they’re calling for more austerity to be imposed by holding down wages, reducing social spending, and further opening up our markets to western capital on reduced terms and at “higher yields”, higher profits – which is the real bottomline here.
Moody’s analysts seem to subscribe to the school of thought, which holds that there is no such thing as a disaster that one cannot profit from – even if it means creating such a disaster where none exists.
This is disaster capitalism at work: with sudden violent economic and psychological shocks, the financiers hope to subdue whole nations into compliance and wipe from their hearts and memories the need to resist the rapacious and insatiable greed of the distant moneymen, who continue to make and manipulate the rules of international finance.