Economy

Economy (235)

Cabinet has approved the reinstatement of medical aid benefits for 15 162 retirees who had their membership cancelled after failing to comply with government regulations for re-registration of the Public Service Medical Aid Scheme (PSMAS) after retirement.

The Bank of Namibia’s Monetary Policy Committee (MPC) on Wednesday resolved to keep the repo rate unchanged at 3.75%, BoN  Deputy Governor Ebson Uanguta has said.

The Bank of Namibia (BoN) is expected to deliver the country's last Monetary Policy Announcement of the year tomorrow (Wednesday), with analysts expecting the central bank to keep the repo rate unchanged at 3.75%.

 Cirrus Capital Head of Research, Robert McGregor, told The Brief that after the SARB rate hike in November, there was pressure for the BoN to follow suit at its final Monetary Policy Committee (MPC) meeting for the year. 

“However, domestic factors and the emergence of the Omicron variant (and subsequent impact of the nascent wave and travel restrictions) provide sufficient room to hold rates once more. Namibia’s repo rate is currently on par with South Africa’s (after the SARB hike in November), a position we can maintain,” he said. 

“Furthermore, economic growth and credit extension growth remain weak, while inflation (although higher than last year) is still moderate. Inflationary pressures are being driven by exchange rates and commodity prices, not due to domestic factors (i.e. not demand driven). The country also boasts substantial hard currency reserves, although we expect these will have fallen with the Eurobond repayment in early November.” 

Simonis Storm Economist Theo Klein said he did not expect any interest rate hike from BoN.

 “We do not expect an interest rate hike to be announced tomorrow. In the last five years, the Namibian repo rate deviated from the South African repo rate 29% of the time,” he said. 

“Indicating that some margin of variation is allowed in practice – as opposed to what standard economic theory would imply when a currency peg is enforced – we do expect a 25bps difference at most between Namibia and South Africa’s repo rates throughout 2022 due to demand side inflationary pressures being more advanced in South Africa compared to Namibia. For example, during the first two quarters of 2021, retail sales increased by 12.7% and 5.0% in South Africa and Namibia respectively, compared to the same period in 2020 (third quarter data for Namibia has not been released yet). Owing to higher demand side inflationary pressure, it is justified for SARB to hike more aggressively than Bank of Namibia (BoN) in 2022,” he said. 

PSG Namibia Research Analyst Shelly Louw, however, expects the central bank to raise the repo rate by 25 basis points following the South African Reserve Bank’s hike in November. 

“This is for Namibia to retain its one-to-one peg to the Rand and to prevent capital flight from Namibia to South Africa in search of higher interest rates. South Africa’s latest inflation rate of 5.0% and Namibia’s latest inflation rate of 3.6% are both within the target bands of 3% to 6% (these are year-on-year inflation rates). Higher oil prices have led to transport inflation increasing and supply chain disruptions due to the pandemic have also placed upward pressure on the prices of several goods and services,” the PSG Analyst said.

 

The Bank of Namibia released the Economic Outlook Update for December 2021 with the domestic economy expected to grow by 1.5% in 2021, and 3.3% in 2022, with risks to domestic growth remaining dominated by the impact of the COVID-19 pandemic.

Industrialisation and Trade minister Lucia Iipumbu says the ministry consulted widely before drafting the Namibia Investment Promotion and Facilitation Act (NIPA), which was tabled before Parliament on Thursday and subsequently withdrawn.

The Ministry of Mines and Energy has announced a price increase of 70 c/litre for diesel and petrol with effect from the 1st of December.

Namibia and China on Thursday signed a Economic and Technical Cooperation Grant Agreement worth nearly N$1 billion.

FirstRand Namibia has launched its FirstJob Internship Programme in line with the financial services group’s broader Namibian talent development drive, to address the cries of the many Namibian graduates without work and professional mentorship. 

A total of 108 building projects valued at N$62 million were completed in October 2021, with more than half of the money being spent on housing projects, latest figures from the City of Windhoek show.

Windhoek will not be forced to be part of the envisaged CENTRAL RED, as participation by any local authorities in its formulation will be voluntary, the Ministry of Mines and Energy has said.