Bank of Namibia to add gold to reserves

The Bank of Namibia (BoN) has announced its decision to start buying gold as part of its foreign exchange reserve management strategy.

A key discussion highlighted the BoN’s decision to commence gold accumulation as part of its foreign exchange reserve management strategy.

The target is to hold 3% of its net foreign exchange reserves in gold.

“This aligns with global central banking trends, given gold’s strategic value in hedging against inflation and enhancing resilience during economic shocks,” BoN governor Johannes !Gawaxab said during an engagement with president Netumbo Nandi-Ndaitwah.

He said during the first three months of the year, foreign reserves declined by 5.2% to N$59.7 billion.

Meanwhile, the import cover is currently estimated at 3.9 months, or 5.2 months when excluding oil and gas-related imports financed externally.

Import cover measures the number of months a country can continue to import goods and services based on its current level of foreign exchange reserves.

A higher import cover indicates a stronger position to manage potential fluctuations in imports or external shocks.

The governor also raised concerns about the broader implications of the tariffs recently imposed by the United States, saying “the impact on our economy is far from insignificant”.

According to !Gawaxab, these tariffs risk undermining the competitiveness of Namibian goods and disrupting global value chains.

This is a mostly secondary effect from key trading partners such as China, the European Union, and South Africa.

“This could potentially reduce Namibia’s export performance and weaken external demand over time,” said !Gawaxab.

Additionally, he said this has placed pressure on the Namibia dollar, with depreciation likely to raise the cost of imports, fuel inflationary pressures, and widen the current account deficit.

As a percentage of gross domestic product, Namibia’s current account deficit stood at 15.3% in 2024.

!Gawaxab said there is a need for proactively pursuing a more diversified export strategy and deepening engagement in global trade diplomacy to safeguard Namibia’s economic resilience in the face of shifting global dynamics.

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