BUSINESS - ECONOMY
| 2013-08-13Debt continues to grow
Chamwe Kaira
THE Bank of Namibia has released its selected monthly statistics for June. The statistics show that total Namibian debt (comprising domestic and foreign government, corporate and household debt) grew by 1,19% during June to N$80,64 billion. This represents an annual growth rate of 10,15%, slightly lower than the growth recorded in May of 10,2%.
Commenting on the statistics, Simonis Storm Securities said total growth has subsided from 25,8% a year ago, mainly as a result of reduced government debt issuance and reduced volume of credit extension to the private sector.
Simonis said private sector credit has grown by 15,5% over the past 12 months, above the Namibian nominal GDP growth rate of approximately 11,5%, indicating continued strong activity within the private sector albeit slightly slower.
As a percentage of GDP, total debt has increased by a percentage point to 77,6%, Simonis said in a report yesterday.
Simonis said total Namibian government debt had stabilised since January 2012, fluctuating between N$24 billion and N$26 billion.
“Over the 12 months to June 2013, total government debt has grown by 0,27% to N$25,69 billion. The government continues to reduce the proportion of its domestic short-term paper (Treasury Bills); currently this is 44% of total domestic debt, compared to 53,7% a year ago.
Simonis said the government debt as a percentage of GDP has also remained fairly constant since July last year averaging 24,64% on a monthly basis.
According to the recently published Medium Term Expenditure Framework funding strategy that goes up to 2015/16 government plans to issue N$11,5 billion in debt securities over that period.
“This will likely push the total government debt GDP to about 31%, up from the current 24,8%. The government has committed to keep its debt below 35% of GDP.
Currently the government has deposits of N$6,7 billion with the Bank of Namibia, down from N$7,8 billion a month ago,” Simonis said.
Credit extended to the private sector (corporate and households) grew to N$54,94 billion in June. The annual growth in credit extension continues to moderate since the highs recorded towards the end of last year. However, the 12-month growth in June picked up to 15,5% from 14,8% for May, the report said.
Corporate debt rose marginally to N$21,1 billion during June, this represents a 1,9% increase for the month and 20,1% over the last 12 months. The 12-month credit extension growth has moderated from 30,2% in November 2012 to the current 20,1%, this moderation may indicate a slowdown in general business activity, the report said. “We expect the trend to remain the same unless there is a change in the interest rate environment.”
Simonis said credit to individuals continues to grow, albeit at a slowing pace, June’s twelve month growth was 12,7%, up slightly from 11,8% for May.
“Household credit growth appears to be growing at a much faster rate albeit slightly lower than June’s 2012 yearly growth of 13,44%. We expect next month’s growth to be even higher with a renewed appetite for consumers to take on debt as can be seen with high new vehicle purchases and increased housing mortgages,” said Simonis said.
Commenting on the statistics, Simonis Storm Securities said total growth has subsided from 25,8% a year ago, mainly as a result of reduced government debt issuance and reduced volume of credit extension to the private sector.
Simonis said private sector credit has grown by 15,5% over the past 12 months, above the Namibian nominal GDP growth rate of approximately 11,5%, indicating continued strong activity within the private sector albeit slightly slower.
As a percentage of GDP, total debt has increased by a percentage point to 77,6%, Simonis said in a report yesterday.
Simonis said total Namibian government debt had stabilised since January 2012, fluctuating between N$24 billion and N$26 billion.
“Over the 12 months to June 2013, total government debt has grown by 0,27% to N$25,69 billion. The government continues to reduce the proportion of its domestic short-term paper (Treasury Bills); currently this is 44% of total domestic debt, compared to 53,7% a year ago.
Simonis said the government debt as a percentage of GDP has also remained fairly constant since July last year averaging 24,64% on a monthly basis.
According to the recently published Medium Term Expenditure Framework funding strategy that goes up to 2015/16 government plans to issue N$11,5 billion in debt securities over that period.
“This will likely push the total government debt GDP to about 31%, up from the current 24,8%. The government has committed to keep its debt below 35% of GDP.
Currently the government has deposits of N$6,7 billion with the Bank of Namibia, down from N$7,8 billion a month ago,” Simonis said.
Credit extended to the private sector (corporate and households) grew to N$54,94 billion in June. The annual growth in credit extension continues to moderate since the highs recorded towards the end of last year. However, the 12-month growth in June picked up to 15,5% from 14,8% for May, the report said.
Corporate debt rose marginally to N$21,1 billion during June, this represents a 1,9% increase for the month and 20,1% over the last 12 months. The 12-month credit extension growth has moderated from 30,2% in November 2012 to the current 20,1%, this moderation may indicate a slowdown in general business activity, the report said. “We expect the trend to remain the same unless there is a change in the interest rate environment.”
Simonis said credit to individuals continues to grow, albeit at a slowing pace, June’s twelve month growth was 12,7%, up slightly from 11,8% for May.
“Household credit growth appears to be growing at a much faster rate albeit slightly lower than June’s 2012 yearly growth of 13,44%. We expect next month’s growth to be even higher with a renewed appetite for consumers to take on debt as can be seen with high new vehicle purchases and increased housing mortgages,” said Simonis said.
