Namibian economy shows good performance: BoN

30 Sep 2015 19:40pm


The Namibian economy displayed a good performance during the second quarter of 2015, the Bank of Namibia (BoN) announced on Wednesday.

The second quarter started in April and ended in June. BoN Deputy Governor, Ebson Uanguta said in a statement issued on Wednesday that strong sales in wholesale and retail trade, coupled with the increased construction activities in both private and public sectors, contributed mainly to the buoyant performance in the real sector.

He explained that the primary industry, however, encountered multiple challenges such as industrial actions, low-grade carats in diamond production and operational, and technical difficulties faced by uranium mining, among others.

"The tourism sector also remained weak on the back of a decline in tourism arrivals, coupled with the decline in the number of beds and rooms sold during the period under review," Uanguta stated.

The deputy governor further said the country's headline inflation declined further on average during the same period as reflected in the categories of transport, housing, water, electricity, gas and other fuels, and food and non-alcoholic beverages.

Namibia's quarterly inflation slowed on average, from 3.8 per cent during the first quarter of 2015 (January-March) to 3.0 per cent during the quarter under review. He said the annual inflation rate for August 2015 was slow at 3.4 per cent, although slightly higher from the rate of 3.3 per cent during the previous month (July).

"With regard to the monetary and financial developments, the Monetary Policy Committee (MPC) increased the Repo Rate during the second quarter of 2015," Uanguta said, stressing that the BoN increased the Repo Rate by 25 basis points to 6.50 per cent in June this year to curb the high growth in credit extended to the private sector, especially to household.

The Repo Rate refers to the rate at which the central bank lends money to commercial banks such as First National Bank (FNB) of Namibia, Standard Bank Namibia, Bank Windhoek and Nedbank Namibia in the event of any shortfall of funds.

During the same period, growth in May slowed, mainly due to the decline in domestic claims, especially net claims by Government, said Uanguta. He added that growth in credit extended to the private sector slowed down as a result of decreased demand for credit by both the household and corporate sectors.

Meanwhile, the central government's outstanding nominal debt stock and loan guarantees rose at the end of the first quarter of 2015/16, but remained within sustainable levels.

Government's total domestic debt increased in line with its borrowing plan. He explained that as a result, the ratio of debt and loan guarantees to gross domestic product (GDP) increased to 23.6 per cent and 3.6 per cent respectively, but remained below Government ceiling and posed no immediate risk to the state's fiscal position.