Windhoek: Bank of Namibia (BoN) Governor Ebson Uanguta stated that the recent decline in international oil prices has not alleviated Namibia's inflation outlook. He explained that the drop is temporary, and the effects of earlier price spikes are still impacting the economy.

According to Namibia Press Agency, Uanguta made these comments while addressing media inquiries after announcing that the Monetary Policy Committee had increased the repo rate by 25 basis points to 6.75 percent. This adjustment raised the prime lending rate to 10.25 percent, a move aimed at maintaining the currency peg with the South African Rand and managing rising inflation.

Uanguta noted that although Brent crude oil prices had briefly exceeded 100 US dollars per barrel before declining, the inflationary pressures generated during that period have not yet dissipated. He emphasized the persistent nature of inflation, stating that prices remain elevated even if the influencing factors change. He further commented that inflation would only decrease once economic actors perceive lower oil prices as a lasting trend rather than a temporary adjustment.

The central bank's June statement revealed that headline inflation accelerated from 2.1 percent in March 2026 to 4.1 percent in May 2026, driven mainly by higher transportation costs linked to oil price hikes. Uanguta highlighted the direct transmission of international oil market fluctuations to domestic prices, with imported inflation quickly affecting the local cost of living.

Regarding the slowdown in Private Sector Credit Extension growth, Uanguta identified two contributing factors. He attributed the reduced demand for credit to subdued economic activity and noted that high household debt levels may limit borrowing capacity and repayment abilities. He stated, "Hence households will resort to not borrowing."

The governor acknowledged the additional pressure on the cost of living due to rising borrowing costs and increasing inflation. However, he affirmed that tightening monetary policy remains the central bank's primary tool for managing inflationary pressures.

Uanguta also discussed efforts to diversify Namibia's economy away from mining towards manufacturing and services, which have shown progress since independence. Nonetheless, he admitted that the country has not yet achieved the targets outlined in Vision 2030 and the National Development Plan. He concluded by emphasizing the need for building adequate skills, securing reliable electricity and water supply, and improving access to digital technology as essential conditions for further economic diversification.