by Denver Kisting
DANIEL Kavishe, an economist at FNB Namibia, yesterday afternoon said the decision by Bank of Namibia (BoN) to leave the repo rate unchanged at 6,75% came as no surprise.
Upon enquiry, Kavishe said: “It was widely expected.”
Briefing reporters in the capital yesterday morning, BoN governor Iipumbu Shiimi said the central bank’s monetary policy committee had decided at their bi-monthly meeting the previous day not to change the rate at which they lend money to commercial banks.
“This level is deemed appropriate to continue supporting domestic economic growth while maintaining the one-to-one link between the Namibia dollar and the Rand.”
Shiimi did not mince his words when he said that the economic picture on the home turf is far from rosy, particularly about the first ten months of the year.
“Economic activity in key domestic sectors remained weak during the first ten months of 2017, relative to the corresponding period of 2016. The weak performance was mainly reflected in the construction, wholesale and retail trade, as well as transport sectors.”
However, it is not all doom and gloom, the governor said. “Other key economic activities such as mining, the number of livestock marketed, communication and manufacturing output, however, improved over the same period.”
Should the economy be able to maintain this trend for these activities, economic recovery would be aided, he said.
Following the peak to 8,2% in January this year, inflation dropped to just over 5% in October.
Household debt remains worrying, and Shiimi urged Namibians to be mindful what they spend on during the upcoming festive season and instead try to save money.
“Don’t spend like there is no tomorrow because there will be a tomorrow.”
In August, BoN had reduced the repo rate by 25 basis points from 7% to the current 6,75%. This was the first repo rate cut in seven years. Since then, it has remained unchanged.
At the time of the August announcement by BoN’s deputy governor, Ebson Uanguta, consumer prices rose at the slowest pace in almost two years.
South Africans are currently holding their breath that the rating agency, Moody’s, might downgrade their rand-denominated debt in February next year, which they fear, might see that currency nosedive.
Responding to a question about whether that should concern Namibia, Shiimi said: “Any sign of stress in South Africa is something we are concerned about, because of the link.”
But, he added, Namibia will only feel the pinch if the neighbouring country’s currency is dealt a blow if the downgrade happens.
Seeing that South Africa is a significant trading partner of Namibia, it is hoped that the outcome of the ruling African National Congress (ANC)’s elective congress there will “maintain stability” so that both economies can grow and create employment, the governor said.