No delinking from rand

27 December 2018 | Economics

The pegging of the Namibian dollar to the South African rand is still in the best interest of Namibia and there are no plans in the near future to delink the local currency.

This was confirmed by both finance minister Calle Schlettwein and the Bank of Namibia (BoN) in statements made over the Christmas weekend.

Schlettwein and Ebson Uanguta, the deputy president of the central bank, were reacting to an article published on Friday by Bloomberg which stated that Namibia is considering delinking the Namibian dollar from the rand after 25 years, due to the fickleness of the currency and the economic challenges it faces.

According to Bloomberg's article, following an interview with Schlettwein in New York, the government is considering its options to amend the currency peg agreement or plot a new way forward for the Namibian dollar.

However, such a change will not take place in the near future because Namibia is also grappling with its first recession in 14 years, Bloomberg reported.

Integration with South Africa, including customs agreements, are to be reassessed, Bloomberg said.

It quotes Schlettwein as saying that the entire basket must be reassessed, in the interest of economic recovery.

Schlettwein told Namibian Sun the journalist had probed him regarding Namibia's financial needs over the next decade.









“We are constantly weighing up the benefits and costs of the common monetary area agreement, including the 1:1 pegging of the two currencies. Delinking is not imminent,” Schlettwein said.





In a statement released on Monday, Uanguta said it is no secret that the BoN, from time to time, evaluates the sustainability of the currency pegging agreement. This forms part of the central bank's policy advice it provides to government, “as it relates to any future options that may be considered, if and when the peg becomes unmaintainable”.

“These assessments have concluded that the benefits from the current fixed exchange rate outweigh the costs.”

He added that delinking could negatively affect Namibia.



Benefits

Namibia's average inflation rate is generally lower than that of sub-Saharan Africa due to the pegging agreement, which allows for lower inflation imports from South Africa. Delinking could compromise this benefit and lead to higher inflation.

Roughly 60% of all imported goods come from South Africa and 1:1 currency pegging agreement saves transaction costs. Imports are thus cheaper than they would be if the currencies were delinked.

Tourism, travel and trade between Namibia and South Africa is boosted in both directions due to the absence of an exchange rate risk, Uanguta added.

“The central bank is of the firm view that the peg remains in the best interest of Namibia. The bank and the finance ministry both believe that no other arrangement will deliver better,” he added.



JO-MARE DUDDY

Similar News

 

Border posts’ revenue in Zambezi falls

3 days ago - 23 July 2021 | Economics

Border posts in Zambezi recorded a 26% decrease in revenue during the 2020/21 financial year, regional governor Lawrence Sampofu has said.Delivering his State of the...

New electronic transfer system to be launched

4 days ago - 22 July 2021 | Economics

A new electronic funds transfer system has been gradually introduced into the Namibian market, with all stakeholders in the banking industry collaborating on the wide-ranging...

Vigilantism growing in South Africa

4 days ago - 22 July 2021 | Economics

SOFIA CHRISTENSENArmed community members and vigilante groups have stepped in to tackle unrest in South Africa, taking matters into their own hands and sometimes stoking...

Developing countries are addicted to coal

4 days ago - 22 July 2021 | Economics

JOHN KEMPCoal-fired power plants are proving hard to shut down in developing economies because they are cheap and convenient, but keeping them going is pumping...

Zambezi customs revenue drops by N$23m

4 days ago - 22 July 2021 | Economics

KENYA KAMBOWERUNDUThe directorate of customs and excise in the Zambezi Region recorded a N$23 million reduction in revenue collected during the 2020/2021 financial year. This...

Namibia’s construction sector still on mute

5 days ago - 21 July 2021 | Economics

PHILLEPUS UUSIKULand delivery was one of the challenges pointed out in the recently released First National Bank (FNB) residential property report.According to the report, for...

SA tourism on edge with double virus impact

5 days ago - 21 July 2021 | Economics

GREGORY WALTONGraced with rolling vineyards, bountiful big game, the iconic Table Mountain, endless sandy beaches and vast cultural riches, South Africa would have expected to...

Investors capitalising on low property prices

6 days ago - 20 July 2021 | Economics

PHILLEPUS UUSIKUThe accommodative monetary policy and struggling rental market has created a window of opportunity for property investors to capitalise on distressed sales.According to Frans...

'Freedom day' in England despite warnings

6 days ago - 20 July 2021 | Economics

London - Virtually all pandemic restrictions were lifted in England yesterday but "freedom day" was met with deep concern from scientists as coronavirus cases surge...

SA unrest to prove costly for economic activity

6 days ago - 20 July 2021 | Economics

The current unrest in South Africa will likely prove costly for the country in terms of damage to property, dampening subdued confidence and weighing on...

Latest News

Toddler drowns in oshikundu, as...

2 hours ago | Accidents

TUYEIMO HAIDULAOSHAKATI A one-year-old child drowned in a bucket of homebrew on Friday afternoon at Akalungu village, Outapi Constituency, in the Omusati Region.The region’s police...

Swartbooi unrepentant about conduct in...

2 hours ago | Politics

WINDHOEKLandless People’s Movement (LPM) leader Bernadus Swartbooi remains unrepentant about his party’s conduct in parliament, saying it is a vibrant institution where “some tolerance for...

Cabinet instructs home affairs to...

2 hours ago | International

NAMPAWINDHOEKCabinet has directed the immigration ministry to enter into an agreement with the Burundian government and the United Nations High Commission for Refugees (UNHCR) which...

Politics over service delivery

2 hours ago | Opinion

The fights in the Windhoek city council comes at a time when the majority of Windhoek residents are yearning for leadership to solve their daily...

11-month-old baby girl raped

2 hours ago | Crime

ELLANIE SMITWINDHOEKThree children raped over the weekendThree suspects have been arrested for the rape of minors in different regions of the country on Saturday.A 24-year-old...

GBV cases drop, Covid-19 may...

2 hours ago | Crime

ELLANIE SMITWINDHOEKA total of 2 643 gender-based violence (GBV)cases were recorded in 2020/2021 in comparison to the 5 427 reported in 2019/2020.The Covid-19 pandemic regulations...

Namibians must manage Recon, says...

2 hours ago | Energy

OGONE TLHAGEWINDHOEKOil exploration company Recon Africa says Namibians stand to benefit significantly if they take ownership of the oil exploration project, and not just from...

Erongo’s ‘slow’ vaccine roll-out

2 hours ago | Health

IRENE-MARI VAN DER WALSWAKOPMUNDErongo governor Neville Andre has announced that he will be inflating the region’s daily vaccination target from 400 to 1 000 through...

Beware of criminals posing as...

2 hours ago | Crime

ESTER KAMATIOTJIWARONGOPeople in the Tsumkwe Constituency last month fell victim to a man who passed himself off as a constable by the name of Martin...

Load More