Chamwe Kaira
Namibia’s banking sector maintained a strong liquidity position in 2025, supported by steady cash inflows and easing monetary policy, even as government borrowing increased, the Bank of Namibia (BoN) said.
The overall cash position in the banking system rose by 5% to N$7.4 billion in 2025, compared to the average recorded in 2024.
This includes funds held locally and in South African accounts. The increase was driven by government spending and proceeds from diamond sales.
Over the past five years, liquidity levels remained high. The 2025 figure is the second-highest after N$8.2 billion recorded in 2023.
The lowest level was N$1.9 billion in 2021 during the post-pandemic recovery after Covid-19. Monthly cash balances stayed above N$5 billion throughout 2025.
Commercial banks maintained liquid asset ratios well above the 10% requirement. The average stood at 21.4% during the year.
The central bank reduced the repo rate by a total of 50 basis points in 2025. The rate dropped to 6.75% in February and to 6.5% in October.
BoN also directed banks to narrow the gap between the prime lending rate and the repo rate. Lending rates declined, with the prime rate ending the year at 10%.
The average lending rate fell to 9.66% from 11.39% in 2024. Deposit rates dropped more slowly, reaching 4.16% from 4.98%.
The government’s borrowing increased during the year. Outstanding government bond debt rose by 17.4% to N$98.8 billion by the end of December 2025. Most of this debt, 90.3%, was in fixed-rate bonds, while 9.7% was linked to inflation.
The government used switch auctions to manage repayments. These included transactions involving the GC25 and GC26 bonds. About N$1.1 billion was redeemed on the GC25. The balance on the GC26 fell to N$2 billion from N$6.4 billion. The GI25 bond was also redeemed in July at N$1.96 billion.
The government bond yields declined during the year, following the drop in the repo rate and trends in the region. Namibia’s bonds are linked to South African instruments, and gains in that market supported lower local yields.
Despite rising debt levels, financing conditions remained stable.
