The Bank of Namibia (BoN) has raised the repo rate by 75 basis points from 5.5 per cent to 6.25 per cent, BoN Governor Johannes !Gawaxab said on Tuesday.
He was speaking during the announcement of the monetary policy statement in Windhoek, where he said domestic economic activity had improved during the first nine months of 2022.
“Inflationary pressure remains elevated, while growth in the Private Sector Credit Exchange Extension (PSCE) improved but remains subdued, with the international reserves stock still sufficient to support the currency peg with the South African Rand and meet international financial obligations” !Gawaxab said.
As of 30 September 2022, the international reserves stock was N.dollars 48 billion, which is a slight decline from the N.dollars 49.2 billion recorded at the end of July 2022.
The decline was a result of portfolio investment outflows and repayments of international loans.
“This translates to about 5.6 months of imports, which are sufficient to cover Namibia’s international financial obligations,” he said.
The governor added that the first half of the year saw a strong Gross Domestic Product (GDP), which indicates an economic recovery in the third quarter mainly reflected in sectors such as mining, agriculture, wholesale and retail trade, communication and tourism.
The construction industry however continues to show decreased activities in both the public and private sectors.
!Gawaxab further predicted that the domestic economy was likely to grow by 3.2 per cent from 2.7 per cent recorded in the same period in 2021.
“The domestic economic growth will be aided mainly by the mining of gold and diamonds, aided by better recovery prospects across most sectors. However, there are risks to this domestic economic outlook such as the war in Ukraine, global supply chain disruptions, and high oil and food prices,” !Gawaxab explained.
He said these factors will cause inflation to persist and prompt further interest rate tightening beyond current expectations.
Meanwhile, Namibia’s inflation rate increased to 5.8 per cent during the first nine months of 2022 from 3.5 per cent in 2021 over the same period due to higher transport inflation as a result of higher international fuel prices.
!Gawaxab said the county’s overall inflation for 2022 is now projected to average 6.1 per cent, up from 5.8 per cent from the previous MPC meeting in July due to a higher food inflation rate and a weaker exchange rate.
The MPC met on 24 and 25th October 2022 and their next meeting is scheduled for 28 and 29 November 2022, with the monetary policy statement expected on 30 November 2022.
Source: The Namibian Press Agency
