Namibia’s banking-sector liquidity showed early signs of stabilisation in November 2025 following the sharp tightening recorded in October during the Eurobond redemption period, as average commercial bank cash balances rose to N$5.4 billion from N$5.2 billion the previous month.
Simonis Storm Economist Almandro Jansen said the improvement was supported by diamond sales proceeds and investment inflows, which helped reverse part of the liquidity drawdown linked to government domestic mobilisation for the Eurobond settlement.
“Conditions, however, remain tighter than levels observed before the redemption. November’s liquidity rebound suggests that the October squeeze was largely event-driven and temporary, rather than a signal of sustained funding stress within the banking system,” Jansen said.
Despite the earlier tightening, banks continue to operate with buffers sufficient to support settlement activity and credit extension. While liquidity conditions have stabilised, they have not yet fully normalised.
On the external front, Jansen said official international reserves increased marginally to N$49.2 billion at the end of November, representing a 1.2% month-on-month rise.
“The modest improvement in reserves reflects valuation effects and slightly higher customer foreign currency placements, rather than a material shift in external flows,” he said.
Reserve cover improved to 3.2 months of imports, or 3.6 months when oil and gas exploration-related imports are excluded, a level broadly in line with prudential adequacy thresholds.
“The October reserve decline was planned within the pre-funding framework and does not point to underlying external vulnerability,” Jansen added.
Monetary conditions remain supportive, though increasingly neutral. The policy rate has been maintained at 6.50%, with lending rates continuing to reflect earlier easing.
At its December meeting, the Bank of Namibia kept the repo rate unchanged while maintaining a supportive stance. Commercial banks subsequently reduced prime lending rates by a further 12.5 basis points, bringing total reductions in 2025 to 25 basis points.
“While further easing is possible, the central bank is likely to proceed cautiously, balancing inflation dynamics with financial stability considerations,” Jansen said.
Corporate credit remains the main growth anchor, despite some moderation. Corporate credit growth slowed to 7.2% year on year in November, with borrowing concentrated in instalment and leasing finance linked to productive investment.
Household credit growth eased further to 2.5% year on year, constrained by affordability pressures and weak mortgage activity.
From a liquidity perspective, Jansen said November marked the start of post-Eurobond normalisation, reinforcing that October’s tightening was temporary rather than systemic.
