The overall liquidity of Namibia’s banking sector increased during October 2020. Liquidity balances held by commercial banks rose to an average of N$3.1 billion in October 2020 from N$2.2 billion at the end of September 2020. According to the Bank of Namibia, the increase in liquidity comes on the back of diamond sales, increased government expenditure and interest payments from the state during the period under review.
Furthermore, the central bank in its banking and statistics report stated that growth in broad money supply (M2) rose at the end of October 2020. The 12-month growth in M2 rose slightly to 11.7% at the end of October 2020, from 11.2% a month earlier.
“The improved growth mainly stemmed from sustained growth in both the net foreign assets (NFA) of the depository corporations and domestic claims specifically net claims on the central government. The higher growth in M2 was reflected by a rise in other deposits like non-transferable deposits during the period under review,” reads the report.
Meanwhile, overall inflation edged lower in October 2020. Namibia’s annual inflation rate stood at 2.3% in October 2020, a meagre 0.1 percentage point change compared to the preceding month. This was reflected in the inflation rates for the categories of food and non-alcoholic beverages, transport, and housing during the period under review. The bank continued that the stock of international reserves held by the Bank of Namibia rose at the end of October 2020. The stock of international reserves rose by 5.2% month-on-month to N$34.4 billion at the end of October 2020. The rise in the official reserve stock was mainly due to SACU inflows during the period under review.