Eurobond impact short-lived
Simonis Storm says the government’s US$750 million Eurobond redemption in October 2025 did not have an adverse impact on banking-sector cash balances, countering earlier expectations of a prolonged cash-flow crunch.
Instead, the firm notes that liquidity conditions have stabilised following a temporary tightening linked to the redemption event. Banking-sector liquidity softened slightly in December 2025, after stabilising in November following the Eurobond-related squeeze in October.
According to Simonis Storm, average commercial bank cash balances declined marginally to N$5.1 billion in December, from N$5.4 billion in November. The moderation reflects softer inflows during the month, partly attributable to lower diamond sales proceeds.
“While liquidity conditions remain tighter than pre-redemption levels, the December outcome continues to suggest that the October squeeze was temporary and event-driven, rather than indicative of sustained funding stress within the banking system,” Simonis Storm said.
“Importantly, liquidity levels remain broadly adequate, and banks continue to operate with sufficient buffers to support credit extension, settlement activity, and normal interbank functioning. The post-redemption adjustment phase appears largely complete, with liquidity conditions now transitioning toward a more stable, albeit slightly tighter, equilibrium,” it added.
Simonis Storm further noted that strong investment inflows underpinned growth in Namibia’s international reserves during the month.
“On the external front, official international reserves increased meaningfully in December, rising to N$51.6 billion, representing a 4.9% month-on-month increase. The improvement was primarily supported by strong net rand inflows driven by portfolio investment, alongside revaluation gains on fixed-income securities,” the firm said.
These inflows were also sufficient to maintain the one-to-one currency peg between the Namibian dollar and the South African rand.
“As a result, reserve cover improved to an estimated 3.3 months of imports, or 3.8 months when excluding oil and gas exploration-related imports, remaining comfortably within prudential adequacy benchmarks,” Simonis Storm said.
“The December reserve outcome reinforces the view that the sharp drawdown recorded in October was anticipated and well managed, in line with Namibia’s debt-management strategy, rather than reflective of balance-of-payments stress,” it added.
