Household debt as a share of disposable income increased from 83%t at
the end of June 2013 to 87% by the end of December 2013.
"This warrants strong monitoring," the Bank of Namibia's Deputy
Governor Ebson Uanguta said in the bank's 2014 first bi-annual
Financial Stability Report issued on Tuesday.
The rise in the household indebtedness ratio is largely attributed to
a faster increase in bank credit to households, relative to the growth
in households' disposable income.
He explained that this household debt is predominantly mortgage loans,
contracted at variable interest rates.
"As such, going forward, any increases in interest rate levels may
place an additional debt burden on households, which is already high
by international comparisons," Uanguta stated.
Despite exchange rate volatility and the severe drought, the domestic
economy registered a satisfactory performance and low inflation during
the second half of 2013.
The deputy governor stressed that domestic engines of growth -
including sizeable construction activity in the mining sector (uranium
and gold) - sustained a brisk growth of the local economy.
"Also, the relatively rapid growth of the tertiary sector,
particularly wholesale and retail trade, suggests a strong growth of
private consumption, albeit putting pressure on the country's
international reserve position," he noted.
Monthly inflation rates have luckily remained relatively low, with an
annual inflation rate of 5.6 % for 2013, down from 6.7% in 2012.