Namibia rating affirmed at BB- as Fitch flags fiscal and external pressures

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Namibia rating affirmed by Fitch

Highlights

Fitch affirms Namibia's BB- rating with a Stable Outlook, citing strong governance and large non-bank financial sector, amid high deficits and debt.
Fitch projects Namibia's real GDP growth rising to 1.7% in 2025 and 2.1% in 2026, driven by oil and gas projects despite mining and climate risks.
Government debt is set to increase to 66% of GDP in 2026, with the budget deficit narrowing to 5.8% and average inflation rising to 4.3% by 2026.

Growth outlook and rating drivers

As reported by Fitch Ratings, Namibia's Long-Term Issuer Default Ratings remain at BB- with a Stable Outlook, supported by comparatively strong governance indicators, an institutional framework stronger than that of many rating peers, and fiscal financing flexibility linked to a large non-bank financial sector. Fitch says those strengths are counterbalanced by high fiscal deficits and government debt, large financing needs and a rigid expenditure structure.

Fitch expects real GDP growth to pick up to 2.1% in 2026 from 1.7% in 2025, although that remains below the projected BB median of 3.5%. After growth accelerates to 4.0% year on year in the first half of 2026, the agency expects momentum to moderate in the second half because of continued mining weakness, recent foot and mouth disease, climate-related risks and spillovers from the Iran war.

Oil and gas exploration continues to support the medium-term outlook, even as momentum has slowed since 2025 pending final investment decisions. Fitch expects TotalEnergies' Venus project to reach a final investment decision by the end of the first quarter of 2027, with production starting in 2031-2032 at about 150,000 barrels per day, while the Mopane project could add more than 200,000 barrels per day after a targeted 2028 decision.

Debt, reserves and inflation risks

Fitch expects Namibia's budget deficit to narrow to 5.8% of GDP in the fiscal year ending March 2027, still above the government's 5.5% target and well above the projected BB median of 3.3%. General government revenue is projected to fall by 2.4 percentage points to 29.3% of GDP on weaker mining receipts and lower administrative fees, before easing further to 28.2% in the following fiscal year.

Government debt is expected to rise to 66% of GDP in the fiscal year ending 2026 from 64.6% a year earlier, driven by domestic borrowing to finance the deficit, and stay above the BB median of 52%. Fitch also forecasts the current account deficit to widen to 15.7% of GDP in 2026 as higher fuel costs and lower mining receipts weigh on external balances, while gross reserves rise to U.S.$3.7 billion by end-2026, equal to 3.4 months of current external payments.

Average inflation is expected to increase to 4.3% in 2026 from 3.5% in 2025. Fitch says the Bank of Namibia resumes tightening in June 2026, lifting the policy rate by a cumulative 50 basis points to 7%, a move that supports the exchange rate peg.

Earlier, we looked at Karakalpakstan issuer ratings after Fitch assigned the Uzbek region first-time BB- IDs with a stable outlook.

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