By Patience Makwele

The Bank of Namibia (BoN)’s Monetary Policy Committee (MPC) on Wednesday announced its decision to keep the repo-rate unchanged at 6.5 percent. The move aims to continue safeguarding the one-to-one currency peg with the South African Rand while supporting and balancing domestic economic recovery. 
 

Speaking at the media briefing, BoN’s governor, Johannes !Gawaxab highlighted the relation behind the decision following the committee's fourth bi-monthly meeting of the year. "Against this background, the MPC unanimously decided to maintain the repo rate unchanged at 6.75 percent," he stated. "This policy stance will continue to safeguard the one-to-one link between the Namibia Dollar and the South African Rand, while supporting domestic economic activity."
 

He noted that the domestic economy has maintained a momentum during the first six months of the year 2025, with growth in Private Sector Credit Extensions (PSCE) showing encouraging signs of recovery. PSCE rose to 5.7 percent in June 2025 compared  to 4.5 percent in April 202 which was driven by increased business borrowing.
 

“This recovery was primarily due to the higher uptake of credit by businesses, especially in the categories other loans, advances and overdraft, as well as installment sale and leasing credit,” explained !Gawaxab.
 

However, the Bank also presented a cautious outlook, revising its GDP growth forecast for 2025 downwards to 3.5 percent, a 0.3 percentage point reduction from its previous forecast. The revision is primarily attributed to a contraction in primary industries, particularly the livestock subsector, which has been impacted by restocking activities.
"The domestic outlook remains tilted to the downside, primarily reflecting the impact of global trade policy shifts, depressed international diamond prices and geopolitical tensions,"he explained.
 

In a move set to directly benefit consumers and businesses, !Gawaxab announced a directive to commercial banks. "In accordance with the guidance note issued by the BON in June, commercial banks are expected to reduce their prime lending rates by 12.5 basis points to 10.375 percent by the end of September 2025." 
The normalization of the prime-repo spread is expected to provide further support for domestic economic activity and credit growth.
 

The central bank also reported that inflation has remained well-contained, easing to an average of 3.6 percent during the first seven months of the year, compared to 4.8 percent in 2024. The MPC forecasts inflation to average 3.8 and 4.2 percent for 2025 and 2026, respectively. Furthermore, international reserves remain adequate, providing an estimated import cover of 3.8 months, which is sufficient to meet the country's international financial obligations.