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Repo rate maintained at 3.75%

Repo rate maintained at 3.75%

Zorena Jantze

THE Bank of Namibia (BoN) has announced that it will keep interest rates unchanged, with the repo rate maintained at a current 3.75%.

The Governor of the Central Bank, Johannes Gawaxab, said that the Monetary Policy Committee (MPC) is of the view that the accommodative monetary policy remains appropriate to support the weak domestic economic activity that is still being weighed down by the Covid-19 pandemic.

“At this level, the repo rate is deemed appropriate to safeguard the one-to-one link between the Namibia Dollar and the South African Rand, while meeting the country’s international financial obligations,” Gawaxab said.

Bank Namibia BoN interest rates unchanged repo rate
INTEREST RATES UNCHANGED: Johannes Gawaxab, governor of the Bank of Namibia.

In addition, the MPC reiterated that the expeditious rollout of Covid-19 vaccines and addressing issues of vaccine hesitancy remain key to secure a speedier and sustainable economic recovery.

The committee noted the increasing trend in inflation globally and recognised its potential impact on monetary policy going forward, Gawaxab said.

On the local front, Gawaxab stated that Namibia recorded a positive GDP growth rate during the second quarter of 2021 compared to a contraction in the corresponding quarter of 2020.

The increase was attributed to better growth in sectors such as hotels and restaurants, wholesale and retail trade, fishing, administrative and support services, as well as information and communication during the second quarter of 2021.

Economic indicators showed that the domestic economy slowed year-to-date relative to the corresponding period of 2020.

The slowdown in economic activity was observed in major sectors such as mining, agriculture, manufacturing, construction, tourism as well as transport and storage.

The central bank’s governor further shared that risks to the domestic economic outlook in the near-term remain and include sudden surges in Covid-19 cases with concomitant disruptions to economic activity caused by potential Covid-19 restrictions.

Touching up on credit uptake from both businesses and individuals, Gawaxab explained that growth in Private Sector Credit Extension (PSCE) moderated to an average of 2.5% for the first eight months of 2021, lower than the average of 4.1% recorded during the same period in 2020.

“The slowdown in PSCE was due to lower demand for credit by both businesses and households, as a result of slow domestic economic activity during the review period. Since the last MPC meeting, year-on-year growth in PSCE declined to 2.0% at the end of August 2021 from 2.8% at the end of June 2021,” Gawaxab said.

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