The Bank of Namibia on Wednesday, 16 February raised the repo rate to 4% from 3.75%, saying this is a step towards normalising the current negative real interest rate environment and establishing a positive real interest rate that is conducive to long-term economic growth.
Namibia’s repo rate is now on par with South Africa after the South African Reserve Bank raised its repo rate from 3.75% to 4% in January this year.
The Bank of Namibia believes the recent increase in the repo rate 25 basis points to 4% is appropriate to safeguard the one-to-one link between the Namibia Dollar and the South African Rand.
Bank of Namibia Governor, Johannes !Gawaxab said the decision to increase the repo rate was taken following a review of the global, regional and domestic economy as well as financial developments.
Meanwhile, the overall domestic economic activity recovered in 2021 compared to 2020, on the back of mining, wholesale and retail trade, communication and tourism.
On the contrary, activity in the construction, manufacturing and transport sectors, as well as the number of cattle, marketed slowed over the same period.
“Going forward, the domestic economy is expected to grow around 3% in 2022. Risks to the domestic economic outlook in the medium-term remain sudden surges in COVID-19 cases and vaccine hesitancy,” !Gawaxab said.