THE Namibian Minister of Finance, Calle Schlettwein has refuted a report that Government is relying on the Government Institutions Pension Fund (GIPF) to pay for its operational budget deficit and stated that it is factually untrue.
Schlettwein was reacting to an article to that regard in local media where it was reported that Government borrowed N$ 34 billion from the pension fund over the last four years and that central
Government is increasingly relying on the pension fund to pay for its budgetary shortfalls.
In an official statement issued by Minister Schlettwein he said it is incorrect, given that Government borrowed in total N$7, 3 billion in the local market during 2018, of which only N$832 million was taken up by GIPF.
“The statement that the Government needed N$52 billion to fund its budget deficits over the past four years is also incorrect, as the total borrowing requirement over the past four financial years adds up to N$33.5 billion.”
The Minister stated that in line with Namibia’s capital market development strategy, and coupled with the risks associated with foreign borrowing, Government deliberately financed a larger portion of its funding needs from the local market.
“GIPF is the biggest pension fund in the country and given the size of its asset base, is the largest domestic market participant. The local market is dominated by GIPF, which inherently explains why GIPF holds a large portion of local government long-term debt, relative to other market participants,” he said.
Schlettwein said as far as exposure to government debt is concerned, GIPF’s Strategic Asset Allocation has a limited exposure of 21 per cent of the total funds to bonds issuance in Namibia which includes both government and corporate bonds.
“This clearly indicates that GIPF, with an exposure of 12 percent at the end of 2018, is not overly exposed to the Government. The insinuation that Government misuses pension fund money to fund its budget and by doing so overexposes the GIPF to Government debt, are unfounded and misleading.”
Schlettwein added that speculation about Government draining the GIPF reserves or was bailed out by the GIPF to fund its budget deficit are untrue.