Repo rate maintained
Inflation still holding steady
The Bank of Namibia (BoN) this week announced that it would maintain the repo rate at 7% following a monetary policy committee meeting held on Wednesday. This would keep prime lending at a rate of 10.75%. Motivating the move, BoN governor Ipumbu Shiimi said: “The monetary policy committee is of the view that at this level, the repo rate is appropriate to support growth while maintaining the one-to-one link between the Namibian dollar and the rand.
The annual inflation rate rose on average to 6.6% during the first ten months of 2016, compared to 3.4% in 2015 Shiimi said. “This was mainly driven by the rise in average inflation rates for the major categories such as housing, water, electricity, gas and other fuel, transport as well as food. On a month-to-month basis, the annual inflation rate rose to 7.3% in October. Shiimi also pointed out that inflation was projected at an average of 5.9% in 2017.
“Inflation is on an upward trend. It is not too worrisome for us and is still manageable. Food has got a lot to do with the inflationary trend because of the drought. At 5.95% it is still expected to be manageable.” Another positive for Shiimi was the slowdown in credit extended to the private sector. For the first ten months it grew at 11.8% compared to 15% in the corresponding period last year. We have witnessed a significant slowdown in the growth of private sector credit extended. What is more pleasing is that looking at the recent two months where credit growth has been below 10%. The rate of growth is starting to decline.”
Shiimi also pointed out that there were sufficient foreign reserves to support the one-to-one peg with the South African Reserve Bank. This, he said, was bolstered by the signing of two asset swaps with NamPower and the Government Institutions Pension Fund to the tune of N$8.9 billion over the span of two consecutive financial years while he confirmed that the Angolan government was up to date with its repayments.
OGONE TLHAGE
The annual inflation rate rose on average to 6.6% during the first ten months of 2016, compared to 3.4% in 2015 Shiimi said. “This was mainly driven by the rise in average inflation rates for the major categories such as housing, water, electricity, gas and other fuel, transport as well as food. On a month-to-month basis, the annual inflation rate rose to 7.3% in October. Shiimi also pointed out that inflation was projected at an average of 5.9% in 2017.
“Inflation is on an upward trend. It is not too worrisome for us and is still manageable. Food has got a lot to do with the inflationary trend because of the drought. At 5.95% it is still expected to be manageable.” Another positive for Shiimi was the slowdown in credit extended to the private sector. For the first ten months it grew at 11.8% compared to 15% in the corresponding period last year. We have witnessed a significant slowdown in the growth of private sector credit extended. What is more pleasing is that looking at the recent two months where credit growth has been below 10%. The rate of growth is starting to decline.”
Shiimi also pointed out that there were sufficient foreign reserves to support the one-to-one peg with the South African Reserve Bank. This, he said, was bolstered by the signing of two asset swaps with NamPower and the Government Institutions Pension Fund to the tune of N$8.9 billion over the span of two consecutive financial years while he confirmed that the Angolan government was up to date with its repayments.
OGONE TLHAGE
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