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Central Bank maintains lending rate at 6.75%

Central Bank maintains lending rate at 6.75%

The Bank of Namibia has decided to keep its repo rate unchanged at 6.75% after a monetary policy committee meeting on 10 April, following a review of global, regional and domestic economic and financial developments.

The central bank this week at a media briefing said that as of 31 March, the official stock of international reserves stood at N$26.1 billion, representing a decline of N$4.1 billion since the end of December 2017.

“Although reserves remain sufficient to sustain the currency peg between the Namibia Dollar and the South African Rand, it is relatively low compared to Namibia’s peers in the region,” central bank’s Governor, Iipumbu Shiimi said.

Shiimi viewed that the government budget delivered earlier in March provided for further narrowing of the fiscal deficit to a level of 4.5% of GDP in 2018/19. Shiimi added that the monetary policy committee welcomed the ongoing fiscal consolidation measures, as these could have a positive impact on the level of foreign reserves going forward.

Furthermore, since the last committee meeting, the growth in private sector credit extension (PSCE) rose moderately to 5.7% at the end of February 2018, from 5.1% in December 2017 as reported in the previous committee statement.

Annual growth in PSCE slowed during the first two months of 2018, compared to the corresponding period in 2017. The average annual growth rate of PSCE stood at 5.3% for the six months up to February 2018, lower than the 7.2% recorded during the preceding six months.

Shiimi said that 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.

In conclusion, annual inflation averaged 3.6% during the first two months of 2018, compared to 8% in the previous year. “The fall in the inflation rate was mainly due to a significant decline in the food and housing categories during the first two months of 2018,” Shiimi said.

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Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys

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