Allexer Namundjembo
The Monetary Policy Committee (MPC) of the Bank of Namibia (BoN) has maintained the repo rate at 6.75%.
The decision was made during its fourth bimonthly meeting of 2025, held on 11 and 12 August.
The committee said the decision aims to safeguard the peg between the Namibian dollar and the South African rand while supporting domestic economic activity.
This follows the South African Reserve Bank’s decision in July to cut its repo rate to 7.00%, reducing the interest rate gap between Namibia and South Africa to 25 basis points.
“After a thorough review of domestic, regional, and global economic developments, we are satisfied that keeping the repo rate unchanged at 6.75 percent is the most appropriate policy stance to support the economy and maintain financial stability,” said BoN governor Johannes !Gawaxab.
The country’s inflation averaged 3.6% during the first seven months of 2025, down from 4.8% during the same period in 2024.
He said economic activity improved in mining, tourism, wholesale and retail trade, transport and communication, crop farming, and electricity, although diamond mining remained weak.
“While growth remains positive, risks such as water supply interruptions in coastal towns and depressed international diamond prices could weigh on our projections,” he said.
Real GDP growth is forecast at 3.5% for 2025 and 3.9% for 2026, slightly lower than previous projections due to contractions in primary industries, particularly livestock, as restocking affects production.
Private sector credit extension grew to 5.7 percent in June 2025 from 4.5 percent in April, driven by higher demand for business loans, advances, leasing credit, and installment sales.
“The growth in PSCE signals renewed confidence among businesses and households, which is critical for sustaining economic expansion,” !Gawaxab said.
Namibia’s external sector improved, with merchandise exports, especially uranium and gold, helping to narrow the trade deficit by 28.2% to N$12.8 billion in the first half of 2025.
Imports increased moderately and international reserves rose to N$58.1 billion by the end of July, providing 3.8 months of import cover, considered adequate to sustain the currency peg and meet international obligations.
“Maintaining the repo rate, even as the anchor country reduced its rate in July, helps narrow the interest differential with South Africa, supporting domestic growth without jeopardising capital flow stability,” the MPC said.
Commercial banks are expected to lower prime lending rates by 12.5 basis points to 10.375% by September, in line with the normalisation of the prime-repo spread, which should further stimulate credit growth.
The MPC welcomed the South African Reserve Bank’s reduction of its preferred inflation rate to 3.0%, saying it “promotes price stability and strengthens monetary policy transmission in the region,” according to !Gawaxab.
The committee noted that global economic conditions remain mixed, with inflation contained in key advanced economies.
Commodity price trends, including uranium and copper, continue to support Namibia’s external balance.
The next MPC meeting will be held on 13 and 14 October 2025.
