WINDHOEK - In these trying economic times some relief for consumers came yesterday when the Bank of Namibia’s Monetary Policy Committee (MPC) left the repo rate unchanged at 6.75 percent. According to the MPC, this rate is appropriate to maintain the one-to-one link between the Namibia Dollar and the South African Rand, while supporting domestic economic growth. The repo rate is the rate at which commercial banks borrow money from the central bank and in turn determines interest rates charged  to bank customers. 

Making the announcement, Bank of Namibia Governor Iipumbu Shiimi noted that the domestic economy remained weak during the first eight months of 2018. “Inflation remained low, but started increasing in recent months. Private sector credit extension (PSCE) growth continued to be slow, while the stock of international reserves is still sufficient,” said Shiimi. 
As at September 30, the stock of international reserves stood at N$32.5 billion, from N$32.6 billion reported in the previous MPC statement. At this level, the stock of international reserves is estimated to cover 5.2 months of imports of goods and services.

However, he cautioned that domestic economic activity remained weak during the first eight months of 2018. “Activity in sectors such as agriculture and wholesale and retail trade continued to decline over this period. Some improvements were, however, visible in the mining, transport and communication sectors. Overall, growth in the domestic economy is expected to remain low in 2018,” Shiimi stated. 

Annual inflation fell to an average of 4.0 percent during the first nine months of 2018 from 6.5 percent in the corresponding period of 2017, but started increasing from April 2018, due to rising fuel prices. The inflation rate rose to 4.8 percent in September 2018 from 4.4 percent during August 2018.

Also, annual growth in PSCE slowed during the first eight months of 2018, compared to the corresponding period in 2017. The average annual growth rate of PSCE stood at 5.6 percent, lower than 7.4 percent recorded over the same period in 2017. The slower growth in PSCE was due to reduced demand for credit by both the household and corporate sectors, especially for mortgage, overdraft and instalment credit. Since the previous MPC meeting, the annual growth in PSCE rose to 6.3 percent at the end of August 2018 from 5.5 percent in June 2018.