The Bank of Namibia (BoN) says the country’s international reserves decreased to N$49 billion as of 30 November 2023.
BoN Governor Johannes !Gawaxab stated that the reserves mark a decline from the N$51.4 billion recorded at the end of October 2023.
“The reduction is primarily attributed to higher net commercial bank outflows. At this level, the stock of international reserves is estimated to cover 5.1 months of imports, thereby remaining sufficient to support the currency peg between the Namibian dollar and the South African Rand while meeting the country’s international financial obligations,” he said.
This comes as the BoN Monetary Policy Committee (MPC) held its bimonthly meeting to decide on the appropriate monetary policy stance to be implemented over the next two months.
To continue safeguarding the peg between the Namibia Dollar and the South African Rand while supporting the domestic economy, the MPC decided to keep the repo rate unchanged at 7.75%.
!Gawaxab said this decision was taken following a comprehensive review of domestic, regional, and global economic developments.
The Governor said domestic economic activity expanded further during the first 10 months of 2023, although at a slower pace compared to the same period in 2022.
“The improvement was observed across most sectors, particularly mining, electricity generation, livestock agriculture, wholesale and retail trade, tourism, communication and transport. Activity in the construction sector, however, remained weak,” he said.
Meanwhile, for 2023, BoN estimates GDP growth to decline to 3.9% from 7.6% in 2022, largely on account of slower growth in the primary industry, following the high base set in this industry during 2022.
Likewise, growth is expected to slow further to 3.4% in 2024.
BoN highlighted that risks to the domestic economic outlook have remained broadly unchanged since the previous MPC meeting, mainly driven by external factors.
“Such external factors are weakening global economic growth, tighter global monetary policy, geopolitical tensions, geoeconomic fragmentation and the fallout of load-shedding in South Africa. Internal risks include the current drought, uncertain rainfall conditions, and water supply interruptions, particularly at the coastal towns,” said !Gawaxab.
Meanwhile, Namibia’s annual inflation rate averaged 6 percent during the first ten months of 2023, slightly up from 5.9% during the corresponding period in 2022.
The Governor said the increase in consumer price inflation was primarily shaped by the rise in food, housing and miscellaneous goods and services components.
Average inflation is, however, expected to steadily decline to 5.9% in 2023 and 4.8% in 2024, from 6.1% recorded in 2022, according to the BoN.
