New credit to private sector grew by N$271.1 million in April
Private Sector Credit Extension (PSCE) increased by 0.3% (N$271.1 million) in April, bringing cumulative credit outstanding to N$92.6 billion, the Bank of Namibia said.
Credit extended to individuals increased by 6.9% year-on-year in April and remained flat from the 7.0% growth recorded in March. Household credit extension rose by 0.5% in April which is marginally faster than the 0.2% registered in March.
IJG Securities stated that although the country’s foreign reserve position strengthened during the month, their expectation is that the Bank of Namibia will leave rates unchanged at its monetary policy meeting next week. By doing this, IJG added, the central bank is not providing consumers and businesses with any further relief, although current rates remain relatively accommodative by historic standards.
The overall liquidity position of commercial banks increased by N$190 million to an average of N$3.2 billion during April.
According to the central bank, government payments and mineral sales proceeds of about N$1 billion contributed to the improved liquidity position during the month.
Moreover, commercial banks continue making use of the central bank’s repo facility, although average repos have moderated from N$344.5 million during March to N$197.1 million in April.
Meanwhile, the South African Reserve Bank’s (SARB) monetary policy committee meeting last month unanimously decided to keep interest rates unchanged, stating that risks and uncertainties that could possibly affect the inflation rate have shifted to the upside.
Consequently, the rand was initially supported by the election of President Cyril Ramaphosa in February, but has since weakened in line with its emerging-market peers as rising treasury yields boosted the demand for US dollar assets. IJG is of the view that the weaker currency may push inflation higher, decreasing the likelihood that SARB will cut interest rates again in 2018.