Namibia: Central Bank's International Reserves Decline to N$32.3 Billion

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28 January 2020

The stock of international reserves held by the Bank of Namibia (BoN) declined both on an annual and quarterly basis at the end of the third quarter of 2019, Bank of Namibia governor Iipumbu Shiimi said in the central bank's quarterly report for Q3 2019. The stock of international reserves decreased by 0.8% year-on-year and 3.5% quarter-on-quarter to a level of N$32.3 billion at the end of September 2019.

This level of reserves is sufficient to provide import cover of goods and services for 4.3 months, compared to 4.2 months a year ago - both of which were above the international benchmark of three months.

Shiimi noted that the decline was mainly due to higher Government foreign payments worth N$1.9 billion during the third quarter of 2019, compared to N$1.3 billion recorded in the third quarter of 2018 and N$1.0 billion registered during the second quarter of 2019.

According to him, despite the pressure from Government foreign payments, the stock of foreign reserves was estimated to be higher.

"The stock of foreign reserves was estimated to be 7.7 times higher than the currency in circulation (CIC) (i.e. above the required 1.0 times the CIC). Consequently, the reserves remained adequate to sustain the currency peg between the Namibia Dollar and the South African Rand."

On the international investment position, Shiimi stated that the net liability position moved slightly lower on quarter-on-quarter, mainly driven by increased direct and portfolio investment assets abroad, coupled with a rise in other investment assets.

"At the end of the quarter under review, Namibia's external balance sheet recorded a lower net liability position both on a yearly and quarterly basis. At the end of September 2019, Namibia recorded a net liability position of N$12.3 billion narrowing from N$14.9 billion, a year earlier, as foreign assets mainly in the form of direct and portfolio investment rose faster than foreign liabilities," he said.

Furthermore, he stated, at the end of the third quarter of 2019, the value of foreign assets rose on an annual basis, mainly as a result of increases in direct and portfolio investment. On an annual basis, Namibia's foreign assets increased by 4.4% to N$155.2 billion at the end of the quarter under review.

The rise in foreign assets was primarily reflected in the value of direct investment abroad, which rose by N$5 billion to N$22.6 billion, due to increases in equity and investment fund shares by Namibian-owned companies abroad, supported by exchange rate revaluations.

Likewise, the increase in foreign assets was also due to portfolio investment as reflected in Namibians' holding of foreign debt securities, which rose by N$3.1 billion to N$28.4 billion.

Namibia's foreign liabilities in the same quarter rose on a yearly basis, mainly due to an increase reflected in other aspects and portfolio investment. On a yearly basis, Namibia's gross foreign liabilities increased by 2.4% to N$167.5 billion at the end of Q3 2019.

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