Namibia’s banking liquidity hits 10-month low, reserves down 2.6%

Commercial banks in Namibia experienced a notable decline in liquidity in July, with average holdings falling by N$274.98 million to N$5.80 billion, the Bank of Namibia (BoN) has reported.

This represents the lowest liquidity position since September 2024, down from N$6.07 billion in June.

According to the central bank, the month-on-month reduction was largely driven by the residual effects of corporate tax payments that were due at the end of June.

“Liquidity in the banking sector declined during July, primarily due to the latent impact of corporate tax outflows from June,” BoN says.

The current reserve level translates into 3.8 months of import cover. When oil exploration and appraisal activities are excluded, the import cover stands at 4.3 months.

Total official reserve assets amounted to N$58.09 billion, with foreign currency reserves at N$53.95 billion. Securities accounted for N$31.92 billion, while currency and deposits with various banks and institutions totalled N$22.04 billion.

Namibia also held N$3.7 million in International Monetary Fund (IMF) reserve positions and N$4.13 billion in special drawing rights.

Short-term foreign currency outflows remain significant, with principal repayments of N$17.34 billion and interest payments of N$1.89 billion due within a year.

Contingent liabilities include principal of N$842.7 million and interest of N$599.5 million.

The reserves are predominantly held in United States dollars, euros, Chinese yuan, yen and British pounds, in line with international settlement requirements and the IMF’s Special Drawing Rights basket.

Meanwhile, Namibia’s international reserves contracted during the month, falling by N$1.54 billion to N$58.1 billion at the end of July. This represents a 2.6% decrease from the N$59.6 billion held at the end of June.

The BoN attributes the decline to higher net South African rand (ZAR) outflows from commercial banks for portfolio investments abroad.

“International reserves fell as a result of increased net outflows, particularly in ZAR transactions linked to portfolio investments outside Namibia,” the Bank of Namibia says.

In an age of information overload, Sunrise is The Namibian’s morning briefing, delivered at 6h00 from Monday to Friday. It offers a curated rundown of the most important stories from the past 24 hours – occasionally with a light, witty touch. It’s an essential way to stay informed. Subscribe and join our newsletter community.