Repo rate maintained at 6.75%
The Governor of the Bank of Namibia, Iipumbu Shiimi said the central bank will maintain the Repo rate at 6.75% to continue supporting domestic economic growth, while maintaining the one-to-one link between the Namibia Dollar and the South African Rand.
At the Monetary Policy Announcement on Wednesday, Shiimi also said that the country’s external current account deficit has narrowed considerably in 2017, from a much higher deficit in 2016, on account of reduced imports and improved exports.
Furthermore, the bank revealed that as at 31 December 2017, the official stock of international reserves stood at N$30.2 billion, representing an increase, both on a monthly and annual basis.
The central bank noted that this annual increase mainly stemmed from higher SACU receipts, debt repayments by the Banco Nacional de Angola, as well as an African Development Bank loan.
“At this level, the stock of international reserves is estimated to cover 4.7 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,” Governor of the bank, Ipumbu Shiimi said.
However, inflation and the rate of growth in private sector credit extension (PSCE) slowed. Annual inflation averaged 6.2% in 2017, compared to 6.7% in the previous year. Shiimi stated that the moderation was mainly due to a significant decline in inflation for food and non-alcoholic beverages during 2017.
Furthermore, the average annual growth in PSCE stood at 6.6% in 2017, lower than the 11.4% recorded in 2016. The slower growth in PSCE is due to reduced growth in credit advanced to both the household and corporate sectors, especially in the form of mortgage and instalment credit.
“Global real GDP expanded by 3.7% in 2017 compared to 3.2% in 2016, on the back of increased economic activity in both Advanced Economies and Emerging Market and Developing Economies. This growth was on account of stronger global household income, improved labour markets and demand. Going forward, the global economy is projected to grow by 3.9% in 2018,” Shiimi said.