A stronger NAD to ease price pressures...as inflation remains stable

April 15, 2018, 5:59pm

As inflation remains stable at 2.5% year on year according to the latest data from the Namibia Statistics Agency (NSA), PSG Namibia anticipates a stronger Namibian currency from now onwards as coming in to help ease price pressures. 

Yet the possibility of higher international oil prices due to a larger than expected increase in the global fuel demand remains a risk, Eloise Du Plessis cautioned last week. 

“The Namibian dollar has appreciated significantly since December 2017, mostly thanks to market-favourite Cyril Ramaphosa’s election as president of South Africa, following Jacob Zuma’s resignation as head of state in February 2018,” she says. 

But the strength and fate of the Namibian currency, pegged against the unstable Rand, is tied to the impact of what Ramaphosa will choose to do as far as improvement of South Africa’s fiscal balance is concerned. 

In simpler terms, a fiscal balance is derived from the amount of money government has from tax revenue and the proceeds of assets sold, minus any government spending.  

When the balance is negative, the government has a fiscal deficit, when the balance is positive, the government has a fiscal surplus. 

But he will have to go above this and provide clarity regarding policy and clean up corruption, factors that investors consider before they can pump in money into any economy.