CHAMWE KAIRA
Namibia’s stock of international reserves increased to N$56.4 billion at the end of June, supported by higher South African rand inflows through commercial banks, gains on fixed income securities, currency depreciation and additional gold monetisation, according to the Bank of Namibia.
The country’s official foreign reserves rose by 1.8% from the previous month, providing an estimated import cover of 3.5 months, or 3.9 months when oil and gas exploration and appraisal-related imports are excluded.
The central bank said the reserve position was equivalent to 10.1 times the currency in circulation, which it considers sufficient to maintain the peg between the Namibia dollar and the South African rand while meeting the country’s short-term international obligations.
Meanwhile, liquidity in the banking sector declined during the month. The banking industry’s average cash balances fell to N$9.8 billion in June from N$10.7 billion in May, mainly due to corporate tax payments.
Growth in broad money supply (M2) moderated during the month, easing to 11.5% year-on-year from 12.1% in May, although it remained in double-digit territory.
The Bank of Namibia attributed the slower expansion to continued weakness in net foreign assets, which contracted by 2.6% year-on-year in June, marking the ninth consecutive month of negative growth since October 2025.
Domestic claims, however, remained robust, increasing by 17.2% from 17.0% in May, largely driven by higher net claims on the central government.
The moderation in money supply growth was reflected across its main components. Growth in transferable or demand deposits slowed to 12.9% from 13.5% in May, mainly due to lower deposit placements by public non-financial corporations, households and other financial corporations.
Growth in other deposits also eased to 10.3% from 10.7%, reflecting lower long-term deposits by businesses, public non-financial corporations and other financial institutions.
Currency held outside depository corporations, the most liquid component of M2, recorded annual growth of 3.5%, down sharply from 7.7% in May.
Private sector credit extension (PSCE) strengthened slightly during June, with the total domestic private sector loan book reaching N$125.5 billion. Annual credit growth increased to 4.5% from 4.3% in May, supported by stronger borrowing by both households and businesses.
However, after adjusting for inflation, real credit growth slowed to just 0.1%, the lowest level recorded since the beginning of 2026 as inflation continued to outpace lending growth.
Business credit growth edged up to 4.5% from 4.4% in the previous month. The increase was driven largely by stronger demand for other loans and advances from companies operating in the mining, wholesale and retail, financial services, and energy, oil and petroleum sectors. Annual growth in other loans and advances accelerated to 3.4% in June from 0.5% in May.
Mortgage lending growth, however, eased to 1.4% from 1.6% a month earlier. Excluding mortgages, private sector credit grew at an annual rate of 7.5% in June, significantly above the headline PSCE growth rate, indicating stronger demand for non-mortgage borrowing.
