Namibia not servicing debts with Chinese money

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Desie Heita
Windhoek

Finance Minister Calle Schlettwein yesterday poured cold water on whispers that Namibia might be refinancing bilateral debt, currently standing at N$74.5 billion, with borrowed Chinese money.
“That is not the case,” he was quick to point out.

Also, the minister revealed that, contrary to popular belief, China is currently not the biggest loan funder to Namibia.

He was emphatic that during the just-ended state visit to China, “discussion opened up the doors for us to get concessional loans, that are better than the normal loans”.
“But there is no refinancing of bilateral debt with Chinese money.”

In fact, Schlettwein said, China is by far the biggest foreign country with the smallest loan amount towards Namibia’s debt stock. More than 50 percent of Namibia’s debts come from domestic borrowing, said Schlettwein yesterday.

According to Treasury documents, domestic debt stock now stands at N$53.92 billion, compared to N$29.8 billion of the estimated foreign debts for the 2018/19 financial year.

The previous year, the domestic debt stock stood at N$48.6 billion compared to the foreign debt stock of N$25.9 billion. As a percentage of the GDP the foreign debt stock only comprise about 16 percent, a percentage trend that virtually has remained, and is expected to remain stagnant for the coming financial years.

Schlettwein explained that the foreign debts are borrowed in the open market in Europe and from development institutions elsewhere, including the African Development Bank (AfDB), the German Development Fund KfW, as well as from Japan and a whole lot of other financial institutions. “China is not a big player in that part of foreign loans,” assured Schlettwein.

When the Fitch rating agency downgraded Namibia’s sovereign rating in November 2017, there were local and foreign institutions holding Namibia’s N$36.8 billion in bonds and notes.

Schlettwein said during the trip part of the discussion with his Chinese counterparts centred on the perception of borrowing money from China. “We did discuss the perception that China is a danger to fiscal affairs of developing states. China assured us that it is up to the state to decide what to do with the funds, they simply extend the loans,” he said.

Deputy Prime Minister Netumbo Nandi-Ndaitwah, at the same media briefing yesterday, cautioned against the negative perception and hype surrounding the level of public debt, and borrowing from China in particular, saying successful business people pin their operations on borrowed money. “As a country you cannot live in isolation, in order to expand one would need to borrow money,” she said, citing the old business adage ‘use other people’s money.’ “I do not think there is any country that does not have foreign loans,” said Nandi-Ndaitwah.

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