Further hike in interest rates expected
The Bank of Namibia’s Selected Monthly Statistics for August 2014 show that total Namibian debt (comprising domestic and foreign government, corporate and household debt) had a positive monthly growth rate of 1.23% during August to N$95.59 billion, representing an annualized growth rate of 13.90%. Simonis Storm Securities Economist, Daniel Kavishe said, “The private sector credit extension growth (PSCE) stands at 16.31% year-on-year and the growth is mainly attributed to growth in corporate debt which grew by 19.82%, the highest growth rate for the past year.”
“This is a result of the monthly growth rate of “leasing transactions” of 7.70% while the year-on-year growth rate of 38.21% in the same category corroborates this movement,” he added. “Using our estimates for GDP growth in 2014, the total debt to GDP ratio stands at 73.61% and public debt to GDP stands at 23.91%, said Kavishe. Said Kavishe, “Household debt growth has been slowing but remains within the bounds of 13% to 15%. The main area of growth in this category (on an annual basis) is overdrafts at 23.38% and instalment credit at 20.38%.” The Namibian repo rate was raised to 6%. “With our reserves continuing to dwindle we anticipate a further 25 basis points hike in interest rates before the year is over,” Kavishe noted. Currently reserves stand at N$13.74 billion while imports cover stands at 3 months or equal to N$19.2 billion.
Meanwhile South Africa’s PSCE eased to 8.80% during the month of August. South African consumers however remain under pressure with credit extension growth remaining subdued at 4.1%.The PSCE comparison between South Africa and Namibia shows that in both countries growth is supported by expansion by businesses.