THE Bank of Namibia’s (BoN) held its bi-monthly meeting and decided to keep the Repo rate unchanged at 6.50%.
This decision was taken following a review of global, regional and domestic economic and financial developments.
The Monetary Policy Committee (MPC) of BoN stated that following the above developments, several central banks in the AEs and EMDEs left their policy rates unchanged, since the previous MPC meeting in August 2019.
Governor of BoN, Iipumbu Shiimi, stated that these include the European Central Bank and the central banks of the UK, Japan, China, South Africa and Angola, while some other central banks, such as those of the US, Brazil, Russia and India cut their policy rates.
Shiimi further stated that the domestic economic activity slowed during the first eight months of 2019.
“The inflation rate remained low, while the Domestic economic activity continued to slow during the first eight months of 2019, compared to the corresponding period of 2018. The slowdown was reflected in sectors such as mining, construction, wholesale and retail trade and agriculture. On the contrary, the manufacturing sector improved during the same period. Going forward, the domestic economy is projected to remain weak in 2019,” Shiimi stated.
He added that the inflation rate declined further to an average of 4.1% during the first 9 months of 2019, down from its recent peak of 5.6% observed in November 2018.
Shiimi explained that the moderation was mainly due to a decline in housing and transport inflation. Overall, inflation is projected to average 3.9% in 2019.
Touching on private sector debt, Shiimi stated that the annual average growth in PSCE was slightly higher at 6.9% during the first eight months of 2019, compared to 6.0% in the corresponding period of 2018.
The increase in PSCE was mainly due to a higher uptake of credit by businesses in the retail, real estate, financial and service sectors.
In contrast, growth in credit extended to individuals declined during the first eight months of 2019, compared to the same period in 2018.
Since the previous MPC meeting, the annual growth in PSCE slowed to 6.4% at the end of August 2019, from 7.8% reported in the previous MPC statement.
As at 30 September 2019, the stock of international reserves stood at N$32.3 billion, compared to N$35.2 billion reported in the previous MPC statement mainly due to increased foreign outflows.
This amount of international reserves is estimated to cover 4.3 months of imports of goods and services.
At this level, the reserves are sufficient to protect the peg of the Namibia Dollar to the South African Rand and meet the country’s international financial obligations.