By Staff Reporter
WINDHOEK – Namibians’ appetite for vehicles, especially import vehicles, bought on instalment credit, has spurned the Bank of Namibia to increase the repo rate by 0.25 percentage points. “The rapid growth in imports of vehicles, partly financed by instalment credit, remains a concern. This has put pressure on the international reserves of the country and requires monitoring. In light of these developments, the Monetary Policy Committee decided to increase the Repo Rate by 0.25 percentage points to 5.75 percent,” said Bank of Namibia’s Governor, Ipumbu Shiimi, yesterday.
The central bank’s Monetary Policy Committee made this decision after reviewing global, regional and domestic economic conditions and financial developments since it last met in mid-April this year. The Repo Rate is the rate at which Bank of Namibia lends money to commercial banks in the event of any shortfall of funds.
According to the governor, the global economy has thus far improved during the first quarter of 2014 and is expected to expand further this year. While growth prospects for the Namibian economy look encouraging, Shiimi warned that declining international commodity process remains a risk. The governor also noted that inflation has shown an upward trend in recent months, but is expected to average around 6 % for the year.
The Bank of Namibia also noted that domestic growth remained positive during the first quarter of 2014, supported particularly by construction, wholesale and retail trade as well as the communication sectors. “In stark contrast, activities such as livestock farming and uranium mining performed weakly”, noted Shiimi.
In the next quarters, Shiimi expects the domestic economy to improve further on the back of construction as well as string growth in demand.
Meanwhile, Shiimi noted that the annual growth rate in domestic private sector credit increased to 15.8 % in April 2014, compared to 14.3 % in December 2013. “Growth in private sector credit resulted from higher demand by both individuals and businesses. The growth in household credit largely reflected string growth in instalment credit and overdraft loans,” remarked Shiimi.