Nam dollar's depreciation leads to upward price pressure

19 Feb 2014 20:50pm
WINDHOEK, 19 FEB (NAMPA) – The Minister of Finance, Saara Kuugongelwa-Amadhila has expressed concern about the volatility of the Namibian Dollar which is pegged to the South African Rand.
She was speaking during the tabling of the 2014/15 National Budget in Parliament on Wednesday.
“This (concern) is mainly ascribed to the initial decision by the United States Federal Reserve to taper its quantitative easing programme. While our exporters must have been quite content with the situation, depreciation puts upward price pressure on imported goods,” she noted.
Kuugongelwa-Amadhila said although Namibia’s export earnings recovered well in 2013, the import bill also rose sharply mainly as a result of emergency imports to respond to the drought situation and a strong fixed capital investment, including mineral exploration.
'Nevertheless, a smaller current account deficit is expected in 2013 compared to the previous year,' she stated.
The resilient performance of the economy is also reflected in the trading volumes and share price performance on the Namibian Stock Exchange (NSX).
“Throughout 2013, the Bank of Namibia maintained its accommodative monetary policy. This was with a view to give the domestic economy room to gain momentum for growth amid uncertainties in the global economy,” Kuugongelwa-Amadhila said.
Private sector credit extension has increased steadily, buoyed by accommodative monetary policy. However, at the end of the third quarter of 2013, growth in the private sector extension slowed, mainly as a result of the reduced credit demand from businesses and households.
“Despite the challenging economic environment, Namibia was able to have its sovereign credit ratings with both Moody’s and Fitch reaffirmed. This materialised because of the fundamentals of our country, and its economy remains robust and consistent. Namibia remains committed to consistently address weaknesses and sensitivities identified during the rating process in order to improve investor confidence,” she added.