Bank of Namibia keeps repo rate unchanged at 7%

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WINDHOEK, 07 December 2016- Governor of the Bank of Namibia (BoN) Ipumbu Shiimi. (Photo by:Etuna Shikalepo) NAMPA

Edgar Brandt

Windhoek-The Bank of Namibia’s (BoN’s) Monetary Policy Committee (MPC) yesterday announced that the Repo rate – the rate at which banks borrow money from the central bank – will remain unchanged at 7 percent. This means that the interest rate of consumer repayments at commercial banks will also remain unchanged, thus not exerting additional financial pressure on consumers.

BoN Governor Iipumbu Shiimi yesterday noted that the country’s inflation rate had slowed from 8.2 percent in January 2017 to 6.7 percent in April 2017. The decline in inflation has been attributed mainly to lower food inflation. Going forward, inflation is expected to average 6.9 percent by the end of 2017.

DOMESTIC ECONOMY
“The domestic economy remained weak during the first four months of 2017, compared to the same period in 2016. This feeble performance was largely reflected in sectors, such as manufacturing and construction, as well as wholesale and retail trade. Moreover, activity in the transport and communications sector also slowed, as mirrored in the lower cargo volumes for rail and sea transport.

“There are, however, some bright spots in the economy as reflected in the value addition for the communication sector, which increased during the period under review. Similarly, activity in the mining sector increased, particularly in the production of diamonds, zinc and gold over the same period. Going forward, the production of uranium and blister copper is expected to improve during the remainder of the year,” Shiimi said.

CREDIT
He also noted that growth in Public Sector Credit Extension (PSCE) slowed during the first four months of 2017. The annual rate of PSCE growth slowed to 8.6 percent during the first four months of the year, from 13 percent during the same period last year.

Since the last MPC meeting, the growth in PSCE this year slowed further to 8.1 percent at the end of April, from 9.1 percent at the end of February. Shiimi explained that the slow growth was witnessed in credit advanced to both the corporate and household sectors, especially in the subcategories of mortgage and instalment credit.

RESERVES
“As at June 2017, the preliminary stock of international reserves stood at N$24.2 billion, representing an increase – both on a monthly and annual basis. The increase was largely as a result of local institutional investors, who decided to liquidate some of their foreign investments to invest in the local economy,” Shiimi explained.

At this level, the country’s stock of international reserves is estimated to cover 3.7 months of imports of goods and services and thereby remains sufficient to sustain the currency peg between the Namibia Dollar and the South African Rand.

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