Liquidity in the banking sector fell sharply in October as commercial banks’ cash balances declined by N$2.13 billion to an average of N$5.18 billion.
IJG Securities said this represented a 29.2% month-on-month decrease from September. The firm noted that October’s drop was partly linked to the Eurobond redemption on 29 October 2025.
This followed a deterioration in September, when liquidity fell by N$806.7 million from an average of N$8.12 billion in August to N$7.31 billion, driven mainly by cross-border payments.
“The overall liquidity position of commercial banks deteriorated further in October, declining by N$2.13 billion to an average of N$5.18 billion. This illustrates a 29.2% m/m decline from September. According to BoN, the decrease in the overall cash balances was partly attributable to the redemption of the Eurobond on 29 October 2025,” IJG said.
Meanwhile, international foreign reserves fell further in October to N$48.57 billion — an 11.2% m/m drop from the N$54.67 billion recorded at the end of September.
According to the Bank of Namibia, the fall in reserves was mainly due to the Eurobond repayment, in addition to net rand outflows by commercial banks, government foreign payments and the appreciation of the Namibia dollar against the US dollar.
“This level of reserves translated to an estimated import cover of 3.2 months, or 3.5 months excluding oil and gas exploration and appraisal-related imports,” IJG said.
Simonis Storm Economist Almandro Jansen said the latest developments highlight a short-term but expected divergence between domestic and external liquidity conditions.
“While internal banking-sector cash balances tightened, the drawdown in reserves was anticipated and aligned with Namibia’s debt-management strategy. The Bank of Namibia confirmed that adequate buffers had been secured ahead of time to ensure the stability of the currency peg and preserve orderly market functioning during the redemption event,” he said.
Jansen added that although the tighter liquidity environment may temporarily constrain credit availability — given commercial banks’ involvement in financing and facilitating the Eurobond repayment — the impact is expected to be manageable and short-lived.
“Incoming SACU receipts, ongoing mineral-export earnings and fiscal inflows are likely to replenish system liquidity heading into early 2026. In the medium term, the successful Eurobond redemption significantly improves Namibia’s sovereign risk profile by eliminating a major refinancing overhang, thereby supporting more stable and sustainable long-term credit and monetary conditions,” he said.
