Fitch affirms Namibia

Fitch Ratings said it affirmed the Republic of Namibia's foreign-currency issuer default rating at BBB-, local-currency issuer default rating at BBB, short-term foreign-currency rating at F3 and country ceiling at A.

The outlook is stable.

The agency said Namibia's foreign-currency issuer default rating continues to be underpinned by the country's sound macroeconomic fundamentals and the improved terms of trade, which are increasingly enhancing creditworthiness. Improved fiscal discipline reduced public debt to slightly below its peak of 34% of GDP in the fiscal year ended in March 2005 and due to the build-up of official reserves in 2006 and the substantial decline in debt owed by the public corporations, the public sector (netting out official reserves only) has become a small net external creditor.

Namibia's current account surpluses and huge national savings are an important rating strength. Fitch said that capital outflows are, however, unlikely to let up in the short to medium term, owing to growing funds under management by Namibia's highly developed pension and insurance funds and still limited domestic investment opportunities.

In addition, social challenges remain a weakness compared with rated peers, including high unemployment, the still highly skewed income distribution, relative poverty and HIV/AIDS, Fitch added.

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