WINDHOEK - Local consumers were granted some marginal relief when the Monetary Policy Committee (MPC) of the Bank of Namibia (BoN) yesterday confirmed that the repo rate will remain unchanged at 6.50 percent.
The repo rate is the rate at which commercial banks borrow money from the central bank and this in turn determines the interest rates consumers are charged at their banks.
According to BoN governor Iipumbu Shiimi, the MPC took the decision in order to continue supporting domestic economic activity and to maintain the one-to-one link between the Namibian Dollar and the South African Rand. The next MPC meeting will be held on 11 February 2020.
At the media briefing yesterday, Shiimi stated that global economic growth continued to slow during the third quarter of 2019 as observed in both the Advanced Economies (AEs) and Emerging Market and Developing Economies (EMDEs). Growth in the global economy is projected to slow to 3.0 percent in 2019, before recovering to 3.4 percent in 2020.
Shiimi noted that the domestic inflation rate declined further to an average of 4.0 percent during the first ten months of 2019. The moderation was mainly due to a decline in housing and transport inflation. In October 2019, the inflation rate also declined further to 3.0 percent down from 3.3 percent in September 2019 and its recent peak of 5.6 percent, observed in November 2018. Overall inflation is projected to average 3.8 percent in 2019.
Meanwhile, inflation rates declined in the AEs in October 2019, except in the US where it increased slightly. Among the EMDEs, inflation also declined in several economies, except for India and China.
“Annual average growth in PSCE increased marginally to 6.8 percent during the first ten months of 2019, compared to 6.2 percent in the corresponding period of 2018.
The increase in PSCE growth was mainly due to a higher uptake of credit by businesses in the retail, real estate, financial and other services sectors.
In contrast, growth in credit extended to individuals slowed during the first ten months of 2019 compared to the same period in 2018. Since the previous MPC meeting, the annual growth in PSCE remained unchanged at 6.4 percent in October 2019, the same rate as reported in the previous MPC statement,” said Shiimi.
As at the 31 October 2019, Namibia’s stock of international reserves remained almost unchanged at N$32.5 billion, compared to N$32.3 billion reported in the previous MPC statement.
This amount of international reserves is estimated to cover 4.3 months of imports of goods and services. Shiimi clarified that the available reserves are sufficient to protect the peg of the Namibia Dollar to the South African Rand and meet the country’s international financial obligations.
In addition, the Bank of Namibia recently announced the moderate easing of loan-to-value ratios applicable to non-primary property loans in its August 2019 MPC statement.
The new regulation relating to restrictions on loan-to-value ratios issued in terms of the Banking Institutions Act, 1998, as approved by the minister of finance was gazetted on 7 November 2019.