Current account balance deteriorates further
Namibia’s current account deficit widened by N$6.4 billion compared to a much smaller deficit of N$315 million in the corresponding quarter of last year.
The Bank of Namibia reported that during the third quarter of the year, the current account deficit, as a percentage of the GDP, increased to 14.3% from a mere deficit of 0.7% over the same period.
“The deterioration in the current account balance was mainly due to a lower surplus on the secondary income account as well as larger deficits in merchandise trade,” the central bank noted.
Meanwhile, the stock of international reserves rose to N$45.9 billion, equivalent to an import cover of 5.7 months at the end of the third quarter.
The increase in the stock of international reserves was mainly supported by the International Monetary Fund’s special drawing rights allocation, its Rapid Financing Instrument and the African Development Bank’s loan acquired by the government.
Further, the Namibia Dollar appreciated against major trading currencies on a yearly basis, but it depreciated on a quarterly basis largely driven by a surge in global COVID-19 cases alongside the civil unrest in South Africa. The effective exchange rate appreciated year-on-year during the review period signalling a moderate decline in competitiveness.