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Namibia’s international reserve stock increases

02/02/2018
by Kelvin Chiringa
Business

Namibia’s foreign reserves rose from a lower level of N$28.5 billion to N$29.7 billion at the end of December 2017, Bank of Namibia revealed yesterday.

The increase in the level of reserves was mainly due to SACU inflows and the second disbursement of African Development Bank loan during the review period.

The annual growth in credit extended to the private sector rose to 5.1 percent at the end of December 2017 from 4.7 percent at the end of November 2017.

The improved growth in Private Sector Credit Extension (PSCE) was mainly reflected in the higher growth observed in credit extended to the business sector, specifically in the categories; overdraft credit and other loans and advances which rose at the end of December 2017.

The annual growth in total credit extended to businesses edged up to 2.7 percent at the end of December 2017 from a growth of 1.3 percent at the end of November 2017.

The improved growth was mainly in line with businesses gearing up for the festive season in order to meet consumer demands during December 2017, thus increasing their demand for short-term borrowing i.e. overdraft credit, other loans and advances.

The annual growth in credit extended to individuals slowed to 6.7 percent at the end of December 2017 from a growth of 7.1 percent at the end of November 2017.

The sluggish growth in credit extended to individuals is evident in most of the credit categories with the exception of other loans and advances, which rose at the end of December 2017.

The annual growth in other loans and advances (i.e. personal/commercial loans and credit cards) rose at the end of December 2017.

On an annual basis, growth in other loans and advances rose to 10.2 percent at the end of December 2017 from 6.6 percent at the end of November 2017.

The increased growth in other loans and advances was evident from both the household and corporate sectors, but primarily more pronounced in other loans and advances extended to the corporate sector.

Growth in other loans and advances extended to businesses rose to 3.8 percent at the end of December 2017 from a contraction of 1.2 percent at the end of November 2017.

The annual growth in total overdraft credit remained steady at the end of December 2017.

Total overdraft credit, which represents about 12.5 percent of total PSCE, grew by 4.1 percent at the end of December 2017, maintaining the same growth rate as in the preceding month.

The steady growth in overdraft credit mainly stemmed from the increased growth observed in overdraft credit extended to the corporate sector during the month under review.

The annual growth in mortgage credit extended to the private sector slowed at the end of December 2017. Growth in mortgage credit, edged lower to 8.0 percent at the end of December 2017, compared to 8.1 percent at the end of the preceding month.

 The moderate decline in mortgage credit particularly stemmed from the household sector, as a result of the general weak domestic economic conditions coupled with the introduction of the maximum loan to value (LTV) ratios for mortgages.

The overall inflation remained constant during December 2017.

The annual inflation rate stood at 5.2 percent in December 2017 maintaining the same growth rate since October 2017.

 The annual inflation rate for some of the major categories such as housing, water, electricity, gas and other fuels, transport and education rose during the period under review, while the rest of the categories slowed.

The overall liquidity position of commercial banks decreased at the end of December 2017.

 The overall liquidity position decreased to N$3.1 billion at the end of December 2017, from N$3.2 billion at the end of November 2017.

The decrease in the overall liquidity position was as a result of the periodic corporate tax payments to the state at the end of

each year.

 The annual growth in M2 rose at the end of December 2017.

The 12-month growth in M2 rose to 9.5 percent at the end of December 2017 from 9.2 percent at the end of November 2017.

The annual increase in M2 growth was partly driven by the improved growth in domestic claims specifically the higher growth in total credit extended to the private sector.

Instalment sales contracted further at the end of December 2017. Growth in instalment sales contracted further to 4.8 percent at the end of December 2017 from a contraction of 4.5 percent at the end of November 2017.

The continued contractions in instalment sales is a reflection of the general decline in the uptake of credit from both the household and corporate sectors at the end of the period under review.