Bank of Namibia revenue plunges due to low interest rates
The Bank of Namibia contributed close to N$10 million to state coffers for the financial year 2013/2014, a stark contrast to the N$25 million the central bank paid out the previous year. This was attributed to a plethora of global developments as well as the prevailing low-interest-rate environment during the year under review.
According to the Bank’s annual financial statements released at a press conference earlier this week, local growth slowed to 4.3% in 2013 as compared to 5% experienced in 2012. Growth was predominantely driven by large private sector projects in the mining sector and business facilities as well as a large public works programme.
Inflation averaged 5.6% during 2013 with interest rates remaining equally low at 5.5 % throughout 2013.
This was done to support the domestic economy on account of the global environment and moderate inflation levels the statement said. Total government debt as a percentage of Gross Domestic Product (GDP) increased slightly by 0.8% to 23.9% for 2013, well below the government’s debt ceiling of of 35% of GDP. The overall Balance of Payments recorded a surplus of close to N$ 600 million for 2013. The current account deficit remained sizeable however, because of a deterioration of the trade balance that more than offset the observed increase in current transfers, the statement said. International reserves held by the Bank of Namibia rose 6.7% to N$15.7 billion for the year under review. However, import cover was lower in comparison to 2012. The central bank said reserves are more than sufficient to support the fixed exchange rate arrangement with South Africa and to meet international obligations. The Namibia Dollar weakened against major currencies. Namibia’s external competitiveness improved in 2013, as shown by the depreciation of the trade-weighted real effective exchange rate the bank’s statement added. On the commercial banking front, all banking institutions reported capital in excess of minimum regulatory requirements. The low interest rate environment was favourable to borrowers with non-permorming loans to total loans remaining at their lowest levels, the statement by the Bank of Namibia concluded.