Bank of Namibia has sounded alarm over the ever increasing import bill in the first quarter of this year.
BoN Deputy Governor, Ebson Uanguta told The Villager that, “On a yearly and quarterly basis, the overall balance of payments (including valuation adjustments) recorded a deficit, mainly as a result of the widening current account deficit and a decreased surplus of the capital and financial account during the first quarter of 2014. The increased current account deficit mirrored a widening merchandise trade balance and increased net payment in services abroad.”
He added that international reserves declined both, quarter on quarter and year on year, by 7.1% and 1.7% to N$ 14.5b, respectively while import payments increased by 10.1% and 21.6% over the same periods, respectively.
“As a result, the import cover reduced to 9.56 weeks during the first quarter of 2014, from 10.07 weeks in the same quarter of 2013.On a yearly basis, the International Investment Position (IIP) recorded a rise in the net surplus position, mainly due to the increased Namibian private sector claims on non residents. Regarding, the exchange rate, the Namibia dollar continued to depreciate against currencies of its major trading partners during the first quarter of 2014, thus supporting the country’s external competitiveness.”
Uanguta noted that the government fiscal position remained strong though a slight increase and remained below the government’s debt ceiling of 35% of GDP, on the other hand the growth in credit aggregates continued to be robust, partly led by the increase in the vehicles import.
Imported vehicles in the first four months of 2014 increased by more than 50% compared to the same period in 2013, the value of imported vehicle amounted to N$2.2b from the total import bill of N$ 15.9b.
“Credit aggregates grew strongly, year on year, in the environment of an accommodative monetary policy stance, although the quarterly growth rates declined. Vehicles import, partly financed by installment credit also increased significantly.
“As a result, BoN after keeping the repo rate unchanged during the first quarter of 2014 increased it by 0.25% at its latest meeting. Namibia’s headline inflation rose during the first quarter of 2014 due to increased inflation for food and non alcoholic beverages, while inflation for transport, housing and alcoholic beverages and tobacco slowed. The inflation rate for May was 6.1 % and remained well within single digits,” Uanguta said.