Reserve Bank keeps repo rate unchanged at 3.75%
The Monetary Policy Committee of the Bank of Namibia unanimously decided to keep the repo rate unchanged at 3.75%, Governor Johannes Gawaxab announced on Wednesday, 21 October.
The decision was made to further support the domestic economy, which contracted during the first eight months of 2020 and is projected to register an overall contraction in 2020.
“The contraction was mainly reflected in sectors such as mining, manufacturing, tourism, wholesale and retail trade as well as transport and storage. On the contrary, activity in the telecommunication and local electricity generation sub-sectors improved during the same period,” Gawaxab said.
Meanwhile, the inflation rate increased to 2.4% in both August and September 2020, from 2.1% in July 2020. Overall inflation is projected to average 2.3% in 2020.
Average growth in credit extended to the private sector declined to 4.1% during the first eight months of 2020, lower than the 6.9% recorded over the same period in 2019. The slowdown was due to lower demand for credit and the repayments made by businesses during the period under review, Gawaxab said.
Furthermore, as of 30 September, the stock of international reserves stood at N$32.7 billion, compared to N$35.4 billion reported in the August Monetary Policy Committee statement. This amount of international reserves is estimated to cover 4.9 months of imports of goods and services.
“At this level, the reserves remain sufficient to protect the peg of the Namibia Dollar to the South African Rand, while meeting the country’s international financial obligations,” Gawaxab added.