TIRI MASAWI
The Bank of Namibia has reduced the Repurchase rate by 25 basis points to 6.50 percent to continue supporting the domestic economy while safeguarding the peg between the Namibia Dollar and the South African Rand.
The move will see commercial banks reducing the spread in the coming weeks, providing relief to Namibians servicing loans and mortgages.
Announcing the decision of the Monetary Policy Committee on Wednesday, central bank Governor Johannes !Gawaxab said domestic economic activity has weakened while inflation remains subdued.
The Apex bank chief said while growth in Private Sector Credit Extension (PSCE) has improved further, it remains relatively weak.
“ The merchandise trade deficit has narrowed further, while the stock of international reserves remains sufficient to maintain the currency peg and meet the country’s international financial obligations,” !Gawaxab said.
He added that the, “The MPC was wary that a lowering of the Repo rate would widen the gap between the domestic policy rate and that of the anchor country but was of the view that its magnitude falls within the boundaries where capital movements remain well-contained. Moreover, while there is imminent pressure on foreign reserves due to the forthcoming Eurobond redemption, thorough preparation in anticipation of this event has ensured that Namibia’s foreign reserve adequacy is not jeopardised.”
According to the central bank, real Gross Domestic Product (GDP) growth has fallen to a post-pandemic low of 1.6 percent year-on-year in the second quarter of 2025 from 3.3 percent during the corresponding period of 2024.
“This poor performance was primarily observed in the manufacturing, fishing, and agriculture sectors. High-frequency indicators further corroborate this trend, suggesting that the pace of expansion in economic activity during the first eight months of 2025 has slowed compared to the same period in 2024.
“Looking ahead, real GDP growth for 2025 is projected to decline from 3.7 percent registered in 2024, with downside risks now more pronounced,” !Gawaxab said.
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