Namibia’s official foreign reserves increased to N$58.8 billion at the end of April 2026, strengthening the country’s external position and providing additional support for the Namibia dollar’s peg to the South African rand.
The latest figures, highlighted by analysts at Simonis Storm and FNB Namibia, show reserves rose by 13.6% from N$51.8 billion recorded in March, driven mainly by inflows from the Southern African Customs Union (SACU) and increased foreign currency placements by customers.
According to Simonis Storm Economist Almandro Jansen, the improvement marks a significant recovery in the country’s reserve position.
“The significant recovery in the official reserve position from the March level is a material positive development that eases the concern we raised about the directionality of the external position,” Jansen said.
At the end of April, Namibia’s reserves were sufficient to cover 3.7 months of imports.
Excluding oil and gas exploration-related imports, reserve cover increased to 4.1 months.
Jansen said reserves were also equivalent to 10.5 times the value of currency in circulation, a level considered adequate to support the one-to-one peg between the Namibia dollar and the South African rand.
The country’s broader external position also showed signs of improvement during the month.
Net foreign assets (NFA) of the depository corporation system contracted by 6.6% year-on-year in April, a marked improvement from the 17.6% decline recorded in March.
In absolute terms, net foreign assets increased to N$83.8 billion from N$72.7 billion a month earlier.
“While NFA of the broader depository corporation system remains in negative territory on a year-on-year basis, the combination of moderating NFA contraction and recovering official reserves suggests that the external balance is stabilising rather than deteriorating further,” Jansen said.
FNB Namibia Graduate Analyst Ndateelela Amukuhu also pointed to the improvement in reserves but warned that the outlook remains uncertain.
“The uptick was primarily driven by SACU inflows, supported by higher Customer Foreign Currency placements,” Amukuhu said.
However, she cautioned that external risks remain elevated.
“The outlook on reserves however remains uncertain. Persistent external headwinds and ongoing pressures on the external account suggest that while recent gains are encouraging, the sustainability of this position will continue to be tested,” she said.
Meanwhile, liquidity in the banking sector remained strong.
Jansen said the average cash position of commercial banks increased by 7.9% month-on-month to N$8.4 billion in April from N$7.8 billion in March, supported by diamond sales proceeds and government spending.
“The elevated cash position continues to provide a favourable funding environment for credit creation, and the absence of any interbank liquidity stress supports the transmission of the repo rate through the lending channel without disruption,” he said.
The strengthening reserve position comes as economists increasingly expect the Bank of Namibia to leave the repo rate unchanged at 6.50% for the remainder of the year.
Jansen said rising inflation and South Africa’s recent 25-basis-point interest rate increase have effectively ruled out further monetary easing.
“The inflation acceleration vindicates our decision to withdraw any expectation of further cuts; our base case is a repo rate hold at 6.50% through 2026, with the risk balance shifting toward tightening should inflation breach 5.0%,” he said.
Following South Africa’s latest rate hike, the interest rate gap between Namibia and South Africa has widened to 50 basis points.
Jansen warned that further rate increases in South Africa, coupled with persistent inflationary pressures, could eventually force the Bank of Namibia to tighten monetary policy.
