Govt has N$53 billion import cover

NAMIBIA, a net importer of basic commodities, has international reserves of N$53 billion, which is equivalent to an import cover of 5,1 months.

This is mainly due to foreign direct investment (FDI) flows from the disposal of equity by resident enterprises in the manufacturing sector, capital inflows from African Development Bank (AfDB) and KfW loans, as well as net foreign currency placement by commercial banks.

According to a statement issued by Bank of Namibia (BoN) spokesperson Kazembire Zemburuka, the country recorded a notable reduction in the current account deficit during the second quarter of 2023, primarily driven by improvements in both the secondary income and the merchandise trade balance.

“The current account deficit shrank to 4,4% of Gross Domestic Product (GDP), from 11,6% registered in the corresponding quarter of 2022.

“This positive development was mainly attributed to a stronger merchandise trade balance, supported by increased receipts from the secondary income account, driven by a substantial rise in Southern African Customs Union receipts and reduced outflows in the services account,” Zemburuka said.

He added that inflation declined to 5,9% during the second quarter of 2023, down from 7,1% in the previous quarter, primarily due to a significant drop in transport inflation, although it remained higher than the previous year.

“This reduction in inflation was mainly driven by a decline in the inflation for transport and food, owing to decelerating pump prices, as well as international oil prices stabilised,” said Zemburuka.

Additionally, a notable decrease in vegetable oil and fat inflation, as well as good grain harvests in South Africa, also contributed to the decline in the inflation rate, he said.

“On an annual basis, overall inflation showed a slight increase of 0,2 percentage points, rising from 5,7% in the second quarter of 2022, primarily due to higher inflation in the food and housing subsectors,” Zemburuka added.

According to the central bank, on a yearly basis, the economy registered a growth rate of 3,7% during the second quarter of 2023, lower than the 8,5% recorded in the corresponding quarter of 2022.

In the primary industry, contractions in sectors such as agriculture, forestry and fishing, weighed on overall economic activity although the mining and quarrying sector continued to sustain growth in this industry.

“Moreover, activity in the secondary industry slowed, mainly owing to a deep contraction in the construction sector. Strong growth in wholesale and retail trade, information and communication, transport and storage, as well as tourism sectors were the main sources of growth in the tertiary industry,” Zemburuka said.

Central government’s debt stock rose through the fiscal year to the end of June 2023, whereas government loan guarantees declined.
Government debt stock stood at 64,2% of GDP at the end of June 2023, representing an annual decline of 1,8% during the period under review, compared to the corresponding period in the previous year.

The decline was driven by both domestic and external debt as a percent of GDP, owing to a faster rise in nominal GDP compared to debt. Central government’s total loan guarantees declined on a yearly basis to 4,3% of GDP, from 5,3% of GDP a year earlier.

The decline was due to repayments of foreign loans guaranteed by government in the transport sector, communication sector, as well as for development finance institutions. – email: matthew@namibian.com.na