Namibia’s banking sector liquidity strengthened in September 2025, with commercial bank cash balances rising to an average of N$7.3 billion, up from N$5.8 billion in August.
Simonis Storm Economist Almandro Jansen said the increase was driven by diamond export receipts, seasonal tax inflows, and government spending, which replenished liquidity and stabilised short-term funding rates.
On the external front, the Bank of Namibia’s official reserves declined by 1.8% month-on-month to N$54.7 billion, equivalent to 3.6 months of import cover.
Jansen said the drawdown reflected higher external payments and pre-funding ahead of the October 2025 Eurobond redemption.
“While the decline in reserves is moderate, it underscores the cost of meeting large foreign-currency obligations amid still-subdued SACU inflows,” he said.
The data show diverging liquidity conditions, with domestic balances improving while external buffers softened ahead of the Eurobond repayment.
Jansen said this trend highlights the importance of export inflows, particularly from mining and diamonds, in sustaining stable banking sector liquidity.
“Looking ahead, the full redemption of Namibia’s US$750 million Eurobond in October 2025 is expected to place temporary downward pressure on reserves, likely reducing the stock to around N$50 billion and import cover to 3.2 months,” he said.
The Bank of Namibia confirmed that sufficient buffers are in place to meet repayment obligations without destabilising the currency peg. Jansen said the outflow will temporarily absorb foreign liquidity.
“The repayment will mark a major milestone in Namibia’s debt management history, significantly improving sovereign credibility and eliminating near-term refinancing risk. Since local banks are facilitating the redemption, there may be short-term crowding-out effects on private credit,” he said.
Some liquidity that would usually support household and corporate lending is being channelled towards government securities, tightening credit conditions slightly in the fourth quarter.
Jansen said the impact should be short-lived as the sector remains well-capitalised and liquid.
“The banking sector remains stable, while upcoming inflows from SACU receipts, mineral exports, and fiscal revenues are likely to restore system liquidity,” he said.
Broad money supply (M2) growth held steady at 10.5% year-on-year in September, up from 10.2% in August.
Jansen said the increase reflects stronger deposit growth, suggesting supportive monetary conditions despite external pressures.
“Transferable deposits increased to 9.2% year-on-year, supported by improved business liquidity and government inflows. While the Eurobond repayment will temporarily tighten external liquidity, strong deposit growth and fiscal injections will cushion the impact,” Jansen said.
