WINDHOEK, Aug. 13 (Xinhua) -- Namibia's President Hage Geingob has said Moody's should not have based its latest rating on the forthcoming ruling Swapo Party elective congress and the national elections scheduled for 2019.
Geingob said this when he addressed a closed door Swapo central committee meeting Saturday in Windhoek.
Swapo will hold its elective congress in December and already some members are jostling for positions.
Moody's downgraded Namibia's credit rating from Baa3- to Ba1 but maintained the negative outlook on Friday.
The rating agency said it downgraded Namibia credit ratings because the country's fiscal strength has been eroded and there is a limited institutional capacity to respond to shocks as well as renewed risk of liquidity pressures.
The agency also noted that the public debt burden had risen rapidly over the past several years, from the low level of 26 percent of GDP when the first assigned the rating in 2011 to the current 42 percent.
"The high share of debt in foreign currency (other than rand) makes the fiscal position vulnerable to a further rapid deterioration in the event of an exchange rate shock, as was the case most recently in 2015," Moody's said.
It further noted that other sources of potential deterioration are unexpected shortfalls in the Southern African Customs Union (SACU) revenues relative to forecasts as well as expenditure over-runs in the context of upcoming ruling SWAPO leadership elections (end-2017) and presidential elections (2019).
Moody's also lowered Namibia's local currency bond and bank deposit ceilings to A2 from A1; the foreign currency bank deposit ceiling to Ba2 from Baa3; and the foreign-currency bond ceiling to Baa2 from A3.
In response, Geingob told the Swapo delegates to the central committee meeting that the agency should not have linked the Swapo elective congress to what is happening in the country currently.
He said Moody's should leave Swapo supporters to express themselves on the issues of the party.
"We are also of the view that nothing material has changed since our last rating valuation and this should be relied upon to justify our rating. It is therefore not true to say that there will be an increase in spending in the run up to the Swapo congress," he said.
Geingob further said that Moody's did not consider material factors that point towards an improvement of the country's fiscal position to justify the downgrade.
Finance minister Calle Schlettwein also accused Moody's on Friday, saying that the agency based the downgrade on speculation.
"While these ratings still reflect investment grade, we also do not think that domestic economic conditions warrant a downgrade at this point," he said.
Schlettwein said Namibia had taken steps to address these risk factors pointed out by Moody's in Dec. 2016.
He argued that although credit ratings change with the changing conditions in the country, Namibia's opinion is that this should have been done after an in-depth assessment and engagement with the government.
"This recent rating action by Moody's relied merely on an exchange of emails on a single item, that of outstanding invoices and how Government is planning to settle them. This is highly regrettable," Schlettwein said.
He also argued that the review was done too early --that is four months into the 2017/18 budget implementation -- and as such is based on a "very narrow base and may contain speculative conclusions on the performance of the budget for the whole financial year."
"The process followed by Moody's is, therefore, not systematic as we are busy developing the mid-year budget review and better-informed rating action and effective country assessment could have benefited from the mid-year budget review planned for October 2017," the minister said.
