Namibia raises repo rate to 6.75 percent

The Monetary Policy committee (MPC) of the Bank of Namibia increased the repo rate by 25 basis points to 6.75 percent, partly to discourage capital outflows and to align interest rates within the Common Monetary Area (CMA).


In its monetary policy statement on Wednesday, the Central bank Governor Ipumbu Shiimi said this decision was necessary to avoid possible capital outflows, which could put pressure on the country’s international reserves.

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“The stock of international reserves remains sufficient to sustain the one-to-one link of the Namibian dollar to the South African Rand, being 5.8 times the currency in circulation,” Shiimi said.

The level of international reserves stood at 27.4 billion Namibian dollars (1.77 billion U.S. dollars) as of Feb. 11, compared to about 23 billion Namibian dollars (1.48 billion U.S. dollars) reported at the last MPC meeting, an increase Shiimi said was because of an asset swap conducted in 2015 which saw institutional investors increase their Namibian assets.

“While the MPC welcomes the continued slowdown in the growth in installment credit, the recent significant increases in other loans and advances are a concern,” Shiimi added.

Meanwhile with the increase in the Repo rate, it is expected that deposit-taking institutions will also increase deposit rates by the same margin, thus encouraging savings, noted the central bank. Enditem

Source: Xinhua

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