International reserves increase to N$56,3 billion

The stock of international reserves increased by 3,7% month-month to N$56,3 billion as at end of April. The increase stemmed from higher SACU receipts, as well as an increase in customer foreign currency inflows.

The foreign reserves translated into four months of import cover, continuing to remain above the international benchmark of three months and adequate to support the Namibia dollar and the South African rand currency peg.

Notably, the import cover excluding imports of oil exploration and appraisal activities stood at 4,7 months at the end of April, relative to 4,4 months recorded at the end of March.

Growth in M2 decelerated to 5,7% at the end of April relative to a growth of 11,6% in March. The decrease in M2 growth, stemmed from a decline in the growth in Net Foreign Assets (NFA) of the depository corporations during the period under review. The slower growth in M2 was also evident in the reduced demand for currency outside depository corporations and longer dated deposits during the period under review. On the contrary, domestic claims registered a positive growth in April, switching from a negative growth observed at the end of March. This slight improvement in the growth in domestic claims was mainly supported by an increase in claims on other sectors.

On an annual basis, growth in Private sector credit (PSCE) edged up to 1,6% in April, compared to a growth rate of 1,3% at the end of March. The increase in PSCE growth stemmed from a marginal increase in demand by the corporate sector during the period under review.

Annual growth in credit extended to businesses registered a meagre growth of 0,6% in April, compared to 0,1% recorded in March. The increase in the growth of credit advanced to businesses stemmed from an increase in demand for instalment and leasing, and other loans and advances.

The annual growth in credit extended to households stood at 2,2% at the end of April, the same rate as recorded in March. Slight improvements in categories such as instalment and leasing, and other loans and advances and overdrafts were offset by a decrease in mortgage loans.

Overdraft credit declined significantly by 9,3% at the end of April, from a contraction of 0,8% in March. Overdraft lending remained in negative territory for the third consecutive month. The decrease was mainly due to a lower appetite for credit by corporations coupled with repayments made by businesses in the manufacturing sector.

The annual growth in instalment sales and leasing credit increased to 14,4% in April, relative to 12,6% at the end of March. The increase in growth mainly emanated from a higher demand from both households and businesses during the period under review.

The annual growth in mortgage credit stood at 0,2% in April, lower than 0,4% recorded in March. The lower growth in mortgage credit mainly emanated from reduced demand from both the corporate and household sectors.

The banking industry’s overall liquidity position increased further in April. The industry’s cash balances rose to N$8,6 billion in April, from N$7,1 billion posted in March. The observed increase in liquidity is mainly attributed to diamond sales and increased government payments on local bonds during the period under review.

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