By Hilary Mare
ACCORDING to the Bank of Namibia (BoN) monthly money and banking statistics, total Namibian debt (comprising of domestic and foreign government, corporate and household debt) grew by 31.4 percent y-o-y compared to a growth rate of 18.3 percent recorded in the prior year.
Essentially, total debt grew by 31.4 percent y-o-y to N$146.8 billion at the end of July 2016 compared to N$111.8billion recorded in the prior year. On a monthly basis, total debt grew by 2.5 percent compared to a 0.8 percent contraction recorded in the prior month.
Positive monthly growth in total debt can be attributed to strong growth stemming from Government and corporate debt.
These categories (Government and corporate) grew by 4.7 percent m-o-m and 1.3 percent m-o-m, respectively compared to -2.9 percent and 0.9 percent, respectively recorded in the prior month. In contrast, household debt grew at a slower pace of 0.5 percent. The upsurge in Government debt can mainly be attributed to the rise in foreign debt by 9.0 percent m-o-m in July compared to – 8.3 percent in the June 2016. Growth in Treasury Bills (TBs) and longer term bonds continue to shrink by 1.2 percent m-o-m and 0.7 percent m-o-m, respectively in July 2016. Monthly growths in bonds are at its lowest since 1.2 percent recorded in December 2015. “Total domestic debt grew by 1.0 percent m-o-m to N$34.3 billion at the end of July 2016 compared to 2.1 percent growth recorded in June 2016. Longer term government bonds contributes about 60 percent of total domestic debt and had sharply grown by 36.0 percent y-o-y to N$19.4 billion in July 2016 from N$14.3 billion in July 2015 meanwhile. Annual growth in TBs slowed significantly by 13.2 percent compared to 43.8 percent recorded in the prior year,” Indileni Nanghonga, trainee economist at Simonis Storm further enlightened.
Private Sector Credit Extension (PSCE) grew 11.0 percent (y-o-y), its lowest growth since February 2012.
“Slowing annual growth can be attributed to slow growth in mortgage loans which grew by 11.1 percent y-o-y in July 2016 compared to 16.7 percent in the prior year. Mortgage loans continuously contributes above 50 percent to total PSCE and has recorded its lowest growth in July 2016 since 11.0 percent recorded during September 2010,” added Nanghonga.
Overdrafts also grew at a slower pace of 2.1 percent y-o-y compared to a 14.5 percent recorded in the prior year. In contrast to a slowdown in credit facilities, borrowing through other loans and advances grew rapidly by 18.5 percent y-o-y compared to14.3 percent recorded in the prior year. On a monthly basis, growth in PSCE was mainly driven by growth in instalment credit and loans and advances categories, which grew by 1.2 percent and 3.5 percent, respectively in July 2016 compared to 1.1 percent and 0.2 percent, respectively during the prior month. Credit through loans and advances were mainly take up by corporates (to 2.1 percent m-o-m in July compared to 0.7 percent in June), while for households, this category continues to shrink. Foreign reserve levels grew by 8.5 percent to N$22.8 billion in July 2016 compared to N$21.0 billion recorded in June 2016 and N$19.2 billion recorded at the last MPC meeting held on the 16th of July 2016. The Bank of Namibia cited that the sudden growth can be attributed to N$3.5 billion inflow from SACU coupled with interest received on investment.
“With the currency (Rand) depreciating (currently at 14.5 Rand against the USD) coupled with the expected $20 million quarterly inflow from Banco Nationale de Angola, we are of the view that foreign reserves will remain stable by the end of September 2016,” concludes Nanghonga.
Confidente. Lifting the Lid. Copyright © 2015