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SONA contradicts central bank on national reserves

by Kelvin Chiringa

President Hage Geingob’s State of the Nation Address (SONA) has contradicted the central bank's latest statistics on the level of the country’s international reserve stock.

Speaking to a capacity filled August house yesterday, the president said the external position as measured by international reserves has improved to 4.6 months of import coverage, up from 3.2 months in 2016.

Contrary to the president’s outdated figures, latest information from the central bank shows that the country’s reserves have in fact declined sharply by N$4.1 billion since the end of December 2017.

As such, international reserves stood at N$26.1 billion projected to cover 3.8 months of imports of goods and services.

Speaking to members of the press, central bank governor Iipumbu Shiimi indicated that this was actually relatively lower than Namibia’s regional peers.

The decline in the country’s reserves has been credited to the Namibian dollar which strengthened against the US dollar as well as purchases made from outside the country.

The reserve stock remains sufficient however, to sustain the currency peg between the Namibian dollar and the South African Rand.

Meanwhile in other business developments, the central bank has kept the repo rate unchanged at 6.75% midst interest rates being low.

“This decision was taken to safeguard the level of foreign reserves in view of the decline in Sacu revenue and various risks related to the future developments in foreign reserves. At this level the repo rate remains supportive of economic growth,” said the governor.

The annual growth in credit extended to the private sector also slowed during the first two months of 2018, compared to the corresponding period in 2017.

Said the governor, “The average annual growth rate of PSCE stood at 5.3% for the six months up to February 2018, lower than the 7.2% recorded during the preceding six months.”

The slowing take-up of credit on the part of households continue to be a positive for the governor who advises savings instead, but he said it is quite worrisome for the business community since they have to take up more credit and induce growth in the economy.

This also comes in the wake of the economic outlook of 1.4% being not that flattering and Shiimi rallied Namibians to work harder and grow the economy beyond its population.

Geingob indicated in his SONA that Angola has made four (4) quarterly payments, totaling approximately 3 billion Namibian Dollars in 2017.

“The total outstanding payment of 1.2 billion Namibian Dollars will be fully settled by June 2018,” he said.