The Monetary Policy Committee (MPC) of the Bank of Namibia yesterday decided to keep the repo rate unchanged at 3.75%. 

The MPC is of the view that the rate remains appropriate to continue supporting domestic economic activity, while at the same time safeguarding the one-to-one link between the Namibian dollar and the South African rand.

According to Johannes !Gawaxab, governor of Bank of Namibia (BoN), recent developments in the domestic economy also pointed to subdued activity in most economic sectors during the first two months of 2021, compared to the same period of 2020.

“Going forward, the domestic economy is expected to grow by 2.7% in 2021. The successful procurement and expeditious rollout of Covid-19 vaccination in Namibia will be critical for the extent and speed of the economic recovery,” he said.

!Gawaxab also stated that the annual average inflation increased to 2.7% during the first two months of 2021, compared to 2.3% for the corresponding months in the previous year. 

The increase in inflation was mainly reflected in the food and beverages categories during the period under review.

On a monthly basis, overall inflation stood at 2.7% in February 2021 – the same as the previous month. Overall inflation is projected to average around 3.2% for 2021.

Furthermore, he noted, domestic demand remained subdued as evidenced by slow growth in private sector credit extension (PSCE), which averaged 2% during the first two months of 2021. 

This growth is much lower than the 6.7% recorded during the same period in 2020.