Nam import cover increases
The government’s fiscal consolidation has had a positive impact according to the Bank of Namibia.
OGONE TLHAGE
The Bank of Namibia says the fiscal consolidation programme introduced by the government has helped increase the country’s stock of foreign reserves.
“As much as we see positive inflows, fiscal consolidation played a role in the reserve building. The fiscal consolidation path has had a positive impact on the reserve levels,” BoN deputy governor Ebson Uanguta said at a press briefing yesterday.
According to bank data, as of 31 July, the preliminary stock of international reserves stood at N$32.7 billion, representing an increase both on a monthly and an annual basis.
Uanguta said the increase was mainly due to repatriation of funds by financial institutions, the African Development Bank loan inflow and repayments by the National Bank of Angola.
Uanguta said financial institutions repatriated about N$2 billion.
“At this level, the stock of international reserves is estimated to cover 5.5 months of imports of goods and services, and thereby remains sufficient to sustain the currency peg between the Namibian dollar and the rand.”
He also commented on the recent credit-rating downgrade issued by Moody’s, which he said would result in increased borrowing costs for the government.
“Any downgrade will have an immediate impact, which is an increase in the cost of borrowing,” said Uanguta.
The deputy governor also announced that the monetary policy committee of the central bank had decided to reduce the repo rate by 25 basis points to 6.75%. The decision was seen as a measure to support economic growth while also maintaining the one-to-one peg with the rand.
“GDP growth is much better than last year. We will revise our growth figures for 2017. There are positive as well as negative weaknesses to take note of in order to compile the new growth numbers for 2017,” Uanguta said.
He said the BoN believed inflation would settle at around 6.2% for the rest of 2017. A softening of food prices is expected to help drive down inflation.
“Namibia’s inflation rate averaged 7% during the first six months of 2017, relative to 6.3% during the corresponding period of 2016,” said Uanguta.
The monetary policy committee will meet again on 17 October 2017.
The Bank of Namibia says the fiscal consolidation programme introduced by the government has helped increase the country’s stock of foreign reserves.
“As much as we see positive inflows, fiscal consolidation played a role in the reserve building. The fiscal consolidation path has had a positive impact on the reserve levels,” BoN deputy governor Ebson Uanguta said at a press briefing yesterday.
According to bank data, as of 31 July, the preliminary stock of international reserves stood at N$32.7 billion, representing an increase both on a monthly and an annual basis.
Uanguta said the increase was mainly due to repatriation of funds by financial institutions, the African Development Bank loan inflow and repayments by the National Bank of Angola.
Uanguta said financial institutions repatriated about N$2 billion.
“At this level, the stock of international reserves is estimated to cover 5.5 months of imports of goods and services, and thereby remains sufficient to sustain the currency peg between the Namibian dollar and the rand.”
He also commented on the recent credit-rating downgrade issued by Moody’s, which he said would result in increased borrowing costs for the government.
“Any downgrade will have an immediate impact, which is an increase in the cost of borrowing,” said Uanguta.
The deputy governor also announced that the monetary policy committee of the central bank had decided to reduce the repo rate by 25 basis points to 6.75%. The decision was seen as a measure to support economic growth while also maintaining the one-to-one peg with the rand.
“GDP growth is much better than last year. We will revise our growth figures for 2017. There are positive as well as negative weaknesses to take note of in order to compile the new growth numbers for 2017,” Uanguta said.
He said the BoN believed inflation would settle at around 6.2% for the rest of 2017. A softening of food prices is expected to help drive down inflation.
“Namibia’s inflation rate averaged 7% during the first six months of 2017, relative to 6.3% during the corresponding period of 2016,” said Uanguta.
The monetary policy committee will meet again on 17 October 2017.
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