The level of foreign exchange reserves held by the Bank of Namibia (BoN) has expanded significantly compared to 2014. The central bank’s latest annual report indicates that foreign reserves increased by 74.3 percent to N$23.6 billion, up from N$13.5 billion in December 2014.
The bank admitted though that the increase was mainly due to the successful issuance of the 10-year Eurobond, amounting to US$750 million during October 2015.
“This was complemented by the bank entering into an asset swap arrangement with the Government Institutions Pension Fund (GIPF), which contributed positively to foreign exchange reserves,” said Deputy Governor of the Bank of Namibia Ebson Uanguta at the recent launch of the banks 2015 Annual Report.
Meanwhile, local stockbroking firm, Simonis Storm Securities (SSS), in its latest credit report, indicated that foreign reserve levels were revised downwards from N$26.2 billion to N$23.6 billion in December 2015 and from N$27.7 billion to N$25.3 billion in January 2016.
“During February 2016 the foreign reserve levels stood at N$25.2 billion. On an annual basis foreign reserves grew by 69.9 percent, but contracted by 0.1 percent on a monthly basis,” noted the SSS report.
“At current levels, the reserves are considered adequate in terms of the Common Monetary Area (CMA) agreement, despite that they are below the international benchmark of three months import coverage,” noted the central banks report.
In terms of import cover, foreign reserves adequacy increased from 7.2 weeks during 2014, to 11.2 weeks of imports by the end of December 2015.
“The increase in adequacy levels… emanated mainly from the issuance of the Eurobond, amplified by Southern African Customs Union (SACU) receipts and asset swap arrangements with institutional investors,” BoN said.