Moderate growth anticipated in domestic economy: Calle

04 Nov 2015 16:10pm
WINDHOEK, 04 NOV (NAMPA) - Namibia's domestic economy is anticipated to grow moderately by 5 per cent this year as the strong expansion in construction activities for major capital projects in the private sector, witnessed in 2014, are reaching completion.
Finance Minister, Calle Schlettwein made the remark when he tabled the Appropriation Amendment Bill during the Mid-Year Budget Review for the 2015/16 financial year in the National Assembly (NA) on Tuesday.
The Amendment Bill will be used to amend the Appropriation Amendment Act of 2015 to increase and decrease certain allocations to Government agencies in efforts to meet the financial requirements of the State during the remainder of the financial year 2015/16 that ends in March 2016.
He said domestic demand conditions have remained relatively strong during the year, despite low inflation standing at 3.3 per cent by September 2015 and a weaker domestic currency.
The minister also noted that the monetary policy’s tightening of the Repo rate to 6.5 per cent by June this year has helped to moderate the growth in household credit extension, which tends to fuel unproductive consumption activity.
“However, the South African Rand to which the Namibian Dollar is pegged to has depreciated significantly during the year with positive spin-offs for domestic exporters but with adverse implications for foreign debt serving and the import bill.”
Schlettwein further said the Namibian Dollar depreciated against major currencies, losing 12 per cent of its value against the US Dollar in recent months.
By midday Wednesday, N.dollar 1 was equivalent to US Dollar 0.073.
Schlettwein said the currency peg provides a fundamental anchor to domestic price stability and a natural hedge in the context of about 70 per cent of imports being sourced from South Africa, thus the peg remains a relevant policy for Namibia.
He explained that the depreciation is largely due to external factors impacting on developing economies globally.
Meanwhile, production in the mining sector is expected to lift the growth trajectory to about 5.5 per cent in 2016 and averaging 5.3 per cent over the Medium-Term Expenditure Framework (MTEF), with associated mineral beneficiation in secondary industries and steady activity in the tertiary industries supporting the medium-term growth trajectory.