THE central bank’s Monetary Policy Committee (MPC) has announced that it will leave the repo rate unchanged at 3.75%, keeping an accommodative interest rate for banks, businesses, as well as individuals.
The Bank of Namibia’s MPC is of the view that the rate remains appropriate to continue supporting the weak domestic economy as another Covid-19 variant triggers renewed restrictions in many parts of the world.
The central bank’s governor, Johannes !Gawaxab further explained that at this pace, the rate is deemed appropriate to safeguard the one to one link between the Namibian dollar and South African Rand, while maintaining the country’s international obligations.
Touching on the domestic economy, !Gawaxab said that domestic activity improved for the first 10 months of 2021, but uncertainties remain amidst the discovery of the Omicron variant and its potential impact.
The economy observed growth in mining, wholesale, retail trading, communications and the tourism sectors.
On the other hand, construction, manufacturing, agricultural and the transport sectors witnessed weakness over the same 10 month period.
!Gawaxab said going forward, the domestic economy is expected to grow by 1.5% in 2021 and 3.3% in 2022.
He further explained that a key risk to the domestic outlook in the medium term remains the surges in Covid-19 cases and virus mutations with accompanying disruptions to economic activity caused by Covid-19 restrictions.
Touching on the private sector and household credit uptake, !Gawaxab said that Private Sector Credit Extension (PSCE) has been moderated to an average of 2.5% for the 10 months of 2021, lower than the 3.7% observed in the same period in 2020.
The slowdown in credit uptake in both businesses and households is attributed to the slow economic activity during the period, !Gawaxab said.
The MPC reiterated that the expeditious rollout of Covid-19 vaccines and addressing issues of vaccine hesitancy remain key to the extent, speed and sustainability of economic recovery.