The Monetary Policy Committee (MPC) of the Bank of Namibia (BoN) decided to keep the Repo rate at 6.25% as they are still evaluating the impact of the last MPC decision.
The BoN Governor, Iipumbu Shiimi said at the MPC press conference held today that the MPC remains concerned about the high growth in instalment credit extended to households.
“A sizeable amount of these loans is still largely used to finance unproductive imported luxury goods, hence putting additional pressure on the international reserves of the country,” said Shiimi.
Shiimi further said the global economy continues to recover at a moderate but uneven pace, supported by improving growth in some major advanced economies, “while that of most emerging market economies slowed. The monetary policy stances remained supportive of growth in most economies, amid a low inflation environment and softer commodity prices,” said Shiimi.
Shiimi also said developments in the domestic economy point towards improved growth during the first two months of 2015 whilst inflation continued to decline. “Risks, however, remain; low commodity prices and the growing import bill, which exert undue pressure on the country’s reserves,” said Shiimi.
However, the improvement in the domestic economy during the first two months is mainly driven by robust public and private construction activities coupled with strong sales in wholesale and retail trade. “In addition, diamond mining and manufacturing activities recorded positive growth. Going forward, the Namibian economy is expected to grow by 5.6% in 2015, up from 5.3% in the preceding year. Risks to domestic growth remain mostly the weak growth in Namibia’s major trading partners and low commodity prices,” said Shiimi.