Since gaining its independence 23 yearsago, Namibia has established an enviable track record ofpolitical stability, prudent macroeconomic policies,moderate growth, poverty reduction, and natural resourceconservation. The country has achieved these gains whilefacing constraints imposed by geography, legacies ofapartheid and colonialism, and the challenges ofconstructing a national government. Daunting challengesremain, however. Namibia suffers from chronic highunemployment, the ravages of HIV/AIDS, and one of the worldmost skewed distributions of income. The structure of theeconomy has remained fundamentally unchanged sinceIndependence: minerals and metals make up the majority ofexports; the public sector remains the largest employer; andthere has been little investment in labor-intensivemanufacturing, which in many countries has absorbedlow-skilled labor exiting traditional agriculture. Thisreport uses the Medium-Term Debt Management Strategy (MTDS)framework developed by the International Monetary Fund (IMF)and the World Bank to analyze options facing the GRN as itprepares the new Sovereign Debt Management Strategy (SDMS).This framework emphasizes the explicit analysis of relativecosts and risks in a debt management strategy, the linkagesbetween the debt strategy and other macroeconomic policies,and the strategy's consistency with debtsustainability. The report opens with a review of theGRN's current debt management strategy, the sources offinancing available to the government, and the macroeconomicenvironment. The report then applies the MTDS analyticaltool to analyze costs and risks of alternative debtmanagement strategies that were developed by MOFparticipants in the November 2012 capacity-buildingexercise. It also examines domestic debt market developmentand contingent liabilities arising from governmentguarantees, two issues of special concern to the GRN.Finally, it discusses institutional arrangements andimplementation issues.
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