05 Nov 2015 11:00am
WINDHOEK, 05 NOV (NAMPA) The direct exchange of currency between the Namibian Dollar and Angolan Kwaza has contributed positively to Namibia's foreign reserves.
Bank of Namibia (BoN) and Banco Nacional De Angola (BNA) implemented the Currency Conversion Agreement on 18 June 2015, for the exchange between two currencies at commercial banks and bureau de changes at the Oshikango and Santa Clara border towns.
Speaking at a media briefing here on Wednesday, BoN Governor Ipumbu Shiimi noted that the BNA has paid Namibia in United States (US) dollars equivalent to N.dollars 282 million, which has brought much-needed foreign reserves into the country.
As a country, Namibia is benefiting from this agreement because the BoN is paid in US dollars for the equivalent amount of Kwanza deposited by our commercial banks, which contribute positively to our much-needed foreign reserves, he said.
Shiimi said the repayment schedule had to be revised to avoid putting unnecessary pressure on Angolas foreign reserves.
The Governor, however, dismissed speculations that BNA is unlikely to have sufficient hard currency (US Dollars) to exchange for the N.dollars 2.8 billion worth of Kwanza in Namibia.
This concern is not supported by facts. We, however, acknowledge that the amount of money exchanged at the start of the agreement was beyond the expectations of both the central banks, he said.
Shiimi further dismissed allegations that the Namibian Dollar is not spent in Namibia and that much of it was taken back into Angola following the implementation of the agreement.
He explained that the data on currency in circulation, which means banknotes and coins issued by the BoN, shows that as at the end of May 2015 (before implementation of the agreement), it was N.dollars 3.68 billion
After the implementation of the agreement as from 27 October 2015, the figure stood at N.dollars 4.02 billion, representing an insignificant increase of N.dollars 334 million compared to the value of Kwanza during the same time, which is equivalent to about N.dollars 3.1 billion.
Shiimi explained that although the increase during this period is insignificant, it is also fair to say that this small increase cannot all be explained by the Kwanza/Namibia Dollar exchange because other developments also need to be taken into account.
It is also worth noting that some of the Namibian Dollar equivalent of the Kwanzas exchanged by business and individuals with accounts in Namibia remained in their accounts held with Namibia commercial banks, he said.
Shiimi said the agreement helps to reduce transaction costs for individuals and small businesses as they do not have to pay double commission by first converting Kwanzas into US dollars and then into Namibian Dollars to pay for goods and services at Oshikango and Santa Clara in Angola.
The agreement is also meant at promoting trade and not to evade the foreign currency exchange restrictions control of the two countries.