Namibia: Money Circulation Drops in June

THE money in circulation in the Namibian economy dropped by N$1,66 billion to N$108,02 billion at the end of June, data from the central bank shows.

This is included in the Money and Banking Statistics report for June 2019 issued by the Bank of Namibia, which indicated that money circulating in the economy had decreased by 1,5% from N$109,68 billion recorded at the end of May this year.

The slowdown implies that cash, cheque deposits, money market securities and mutual funds decreased in June compared to May transactions.

According to the central bank, the slowdown in money supply was attributed to the decrease in net foreign assets, short-term and long-term deposits from the government, and non-financial public corporations.

Net foreign assets shrunk by 9,9% from N$44,6 billion in May to N$40 billion in June 2019, accompanied by a reduction in the borrowing of the private sector in June.

"The slide can be connected to the business sector making repayments on their short-term credit facilities like overdrafts, which in turn affected their demand for more credit," the report stated.

The central bank explained that credit in the private sector is made up of businesses and private individuals, which can either be overdrafts, instalment sales or property loans.

A dip of 2,8% was also recorded in June 2019, mainly because of repayments made by businesses in logistics and the tourism sector.

The central bank's report also showed that although individual demand for credit soared by 7,3% in June, instalment sales continued falling for businesses.

A fall in demand for vehicle purchases continued, translating to a decline of 5,5% in instalment sales in June.

Last month, Simonis Storm's analyst, Indileni Nanghonga, said the global vehicle industry was largely threatened by the trade war between the United States and China.

- michael@namibian.com.na

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