CREDIT rating agency
Reinforcing this statement are the economic and financial pressures the coronavirus shock is exerting on
The prolonged recession, sharply rising debt, and significantly larger gross borrowing requirements amid tighter financing conditions also particularly expose
While analysts also agree with Moody's, they said, this should not spark panic in the market as Covid-19 is having a devastating effect on most, if not all, economies in the world.
According to the statement, the outlook on the government of
What this means is that investors who like to normally buy up Namibian government debt are forewarned to stay away, as the expectation is that
Moody's said the decision to change the outlook to negative reflects the challenges the government faces as a result of the coronavirus shock and the difficulties in addressing the vulnerabilities present in the rigid structure of the country's economy and government budgetary position.
The agency also said the significant contraction in the national output, and a much larger fiscal deficit, as a result of the coronavirus outbreak and associated policy response, will add to the already deteriorating fiscal trends in
"Coupled with the continued weakness and subdued growth in its important trading partner
"While the government has moved quickly to address the health challenges posed by the coronavirus outbreak, the effect on the economy leaves
The agency expects the gross domestic product to contract by at least 7% this year, and bounce to a 1,8% growth in 2021.
Both mining and tourism are expected to contract sharply due to subdued global commodities demand, lockdown curtailing many mining operations and the exports of minerals, as well as cessation of international travel.
Equally selling
The high government wage bill, high debt servicing, rigid budget structure and repetitive ambitious fiscal consolidation will become increasingly more difficult and are expected to make matters even worse said the rating agency.
Reacting to the announcement, economist
"It should also not cause any panic in the market, because [I doubt], there's any country in the world today that will get a positive outlook from Moody's," he said.
Hei added that the world's biggest economies are even expected to roll over about
He, however, said, the worrying part of the negative outlook is the "exacerbating existing vulnerabilities" that Moody's is alluding to.
"This is where the structural reforms should take root and reset
PSG Wealth Namibia's
"In fact, it is likely that Fitch will also soon change its outlook to negative," she said.
The country's long-term local currency bond and bank deposit ceilings remain unchanged at Baa1. The long-term foreign currency bank deposit ceiling, and the long-term foreign-currency bond ceiling also remain unchanged at Ba3 and Baa3, respectively, said Moody's.
Attempts to get comment from the Ministry of Finance yesterday were not successful.
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