Nam dollar not threatened by SA downgrade: Schlettwein

14 Apr 2017 10:50am
WINDHOEK, 14 APR (NAMPA) - Minister of Finance, Calle Schlettwein has given his assurance that the Namibia Dollar is not threatened by the downgrading of South Africa’s sovereign credit rating.
Schlettwein, who was speaking to the Namibia Chamber of Commerce and Industry (NCCI) business delegation at State House on Wednesday, said the pegging of the Namibian Dollar to the South Africa Rand is something positive for the Namibian economy.
“It adds a lot of resilience and takes a huge amount of foreign exchange risk out of our economy,” he said.
Namibia imports 70 per cent of its consumables from South Africa and pays in Rand.
“If you lose that peg, you pay in a foreign currency and that makes the risk much higher,” he explained.
Schlettwein said Namibia should maintain the status quo, but keep its eye on the ball.
“For now, there is no doubt in our mind that the peg is good and that we should maintain it,” he stressed.
Schlettwein also noted that a stabilised economy for Namibia does not mean the country is risk free and not affected by the downgrade of South Africa’s credit rating.
“We are to a large extent integrated into the economy of South Africa. When the credit rating of South Africa changed, the Rand lost about 10 per cent value,” he said.
Sovereign credit ratings by rating agencies are a measure of an economy’s ability to pay back debt that it took up at different levels, be it international, regional or domestic.
Two weeks ago, the Rand weakened after President Jacob Zuma’s Cabinet reshuffle in which he sacked Finance Minister, Pravin Gordhan and replaced him with Minister of Home Affairs, Malusi Gigaba.
Ratings agencies perceived the reshuffle as increased political risk.
Last week, S&P Global Ratings downgraded South Africa’s sovereign credit rating to junk status.