The Bank of Namibia (BoN) on Wednesday announced that its Monetary Policy Committee (MPC) had resolved to keep the Repo rate unchanged at 3.75 percent.
“The MPC is of the view that the rate remains appropriate to continue supporting domestic economic activity, while at the same time safeguarding the one-to-one link between the Namibia Dollar and the South African Rand,” BoN Governor Johannes !Gawaxab said.
He said domestic economic activity had slowed during the first eight months of 2020, compared to the same period of 2019. The bank forecasts the domestic economy to contract by 7.8 percent in 2020 (under the baseline scenario) before a moderate recovery of 2.1 percent in 2021.
“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 subsectors improved during the same period,” !Gawaxab said.
The average growth in Private Sector Credit Extension (PSCE) according to the Governor, declined to 4.1 percent during the first eight months of 2020. This figure is lower than the 6.9 percent recorded over the same period in 2019.
“The slowdown in PSCE was due to lower demand for credit and the repayments made by businesses during the period under review. The growth in credit extended to businesses declined to 1.6 percent during the first eight months of 2020 compared to 9.0 percent over the same period in 2019. Since the previous MPC meeting, growth in PSCE slowed to 2.6 percent at the end of August 2020 from 2.8 percent in June 2020, mainly due to a lower uptake of credit by businesses. It was noted that the maximum repayment period for vehicle installment sale agreements was extended as from the 1st of September 2020, providing support to credit extension for households in particular,” he said.
!Gawaxab said as of the 30th of September 2020, the stock of international reserves stood at N$32.7 billion, compared to N$35.4 billion reported in the August MPC 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,” he said.