23 Oct 2013 14:00pm
WINDHOEK, 23 OCT (NAMPA) The Bank of Namibia (BoN) has announced that the repo rate will remain unchanged at 5.50 per cent.
BoN Governor Ipumbu Shiimi announced on Wednesday during a media conference on the Banks Monetary Policy that the decision to keep the repo rate unchanged was taken at their last financial meeting held on 20 August 2013.
BoNs Monetary Policy Committee (MPC) is of the view that the repo rate needs to be maintained at the current level of support to the domestic economy, and mitigate the impact of suppressed prices for key Namibian exports, he noted.
In line with the global growth outlook, economic growth in Namibia is expected to slow in 2013 compared to 2012.
According to Shiimi, indicators in the primary sector suggested that the mining sector output is increasing, while the agriculture sector remains embattled due to the current drought.
However, the agriculture sector recorded an increase in the number of cattle and small stock marketed due to the prevailing drought. Moreover, slaughtering activities at local abattoirs rose in light of the drought that affected most parts of the country and contributed towards this development, said the governor.
In secondary industries, construction activities remain fairly strong, with a mixed picture seen in the manufacturing sector.
Shiimi said cement sales have increased by 60 per cent.
Tertiary activities are positive with regards to wholesale and retail trade, while tourism and transport activities have experienced a slowdown year-to-date.
Speaking about inflation, Shiimi emphasised that inflation fell to 5.5 per cent in September 2013 from 6.0 per cent in the preceding month.
The fall was mainly attributed to lower inflation in the food and beverages category. This decline was driven by lower inflation for bread and cereals, meat and dairy products and eggs. Electricity and other fuels, as well as transport and inflation, remain high. Inflation is expected to remain stable around current levels for the reminder of the year, he said.
The biggest headache for the central bank is growth in extension to individuals remains elevated and requires monitoring, according to Shiimi.
He said the annual growth in the Private Sector Credit Extension (PSCE) slowed at the end of August 2013 compared to the preceding month. Growth in PSCE slowed to 13.8 per cent at the end of August 2013 from 14.8 per cent at the end of July 2013. The slower growth in PSCE was attributed to the lower demand for credit by businesses.
On foreign exchange reserves, Shiimi noted that the stock of foreign reserves stood at N.dollars 14.3 billion as at the end of September 2013. Though lower than in July, reserve levels remain adequate to maintain the fixed currency arrangement and meet other international obligations.
Nevertheless, the situation will receive continuous oversight going forward, he said.