The Bank of Namibia on Monday scoffed at the unflattering grade its governor, Johannes !Gawaxab received in the latest Global Finance Central Banker’s Report.
“Inconsistent” and “fundamentally flawed” were two of the terms BoN used on Monday to respond to the D+ rating assigned to !Gawaxab.
As a corporate finance magazine, Global Finance, with input from analysts, economists and financial industry sources, graded the world’s leading central bankers on a scale of A to F, with A being the highest grade and F the lowest.
“Acknowledging that these ratings are computed with input from analysts, economists, and other subjective sources, the bank has noted with grave concern the inconsistency in the rating and subsequent reports stemming from the subjectivity of the interpretations of the ratings. These reports and the conclusions thereof appear fundamentally flawed.
For example, an attempt to correlate the actions of the central bank and the performance of the governor, to the overall macroeconomic conditions in the country is inaccurate and highly misleading as the bank is restricted to its role of ensuring monetary and financial stability,” read a statement from BoN spokesperson, Kazembire Zemburuka.
The central bank spokesperson further cited “common cause” that Namibia’s macroeconomic stability was already severely tested during the two years before the Covid-19 pandemic.
“During such difficult economic times, confidence tends to be affected negatively. Notwithstanding the unprecedented shocks on the economy and financial institutions, Namibia has emerged relatively resilient thanks to the prompt measures undertaken by key stakeholders, including the Bank of Namibia. These measures were taken to maintain credit flow and to ensure that the domestic market was liquid - conditions essential in averting a crisis and a deeper recession,” Zemburuka added.
He continued that the deterioration of general confidence induced by the pandemic continued to undermine the effectiveness of central banks’ measures amid already-low credit uptake, which he said further negatively affected consumption and investment, which are key elements for economic recovery.
Said Zemburuka: “Namibia’s inflation and policy rates are at historic lows, and we continue to support individual households and businesses to weather the pandemic-induced storm. We have a stable, modern, and sound financial system despite serious challenges introduced by Covid-19; banks remain profitable, well capitalised, payments and settlements continue uninterruptedly and so does credit provisioning. We continue to work closely with government, private sector agencies to ensure economic recovery and sustainable economic development going forward.”
Zemburuka, therefore, remained steadfast that the magazine rating does not invalidate the significant contributions of the monetary authority during the past 19 months. He pointed out that decisions taken by the central bank have effectively stabilised the domestic financial system and provided a solid foundation for economic agents and authorities, to build on, in continuous efforts to recover the economy.
“Ultimately, the bank is accountable for its actions to the Namibian people. In this regard, the bank’s actions are guided by data, economic conditions, and monetary arrangement and not by opinions and wish lists. The record speaks for itself. For this reason, the bank wishes not to dwell on the ratings nor attach weight thereof, as they appear to lean more towards the subjective side of the spectrum,” Zemburuka stated.
Other central bank heads in the southern African region performed better than !Gawaxab, with Botswana’s Moses Pelaelo scoring a B+, Angola’s José de Lima Massano was assigned a B-, Harvesh Kumar Seegolam from Mauritius scored a B while Henri Rabarijohn from Madagascar was also rated a D+.
According to Global Finance, the ratings were based on a series of objective and subjective metrics, including the appropriate implementation of monetary policy for the economic conditions of each country. Judgments were based on performance from 1 July 2020 to 30 June 2021 for governors who held office for at least one year in order to receive a letter grade.
“We apply an algorithm to increase the cohesion of the grades between the different geographical areas, with 100 signifying perfection. The proprietary algorithm includes criteria—such as monetary policy, supervision of banks and the financial system, asset purchase and bond sale programs, accuracy of forecasts, quality of guidance, transparency, independence from political influence, success in meeting specific mandates (which differ from country to country), and reputation at home and internationally—weighted for relative importance,” stated Global Finance.
Caption: (Johannes)