In light of the lead article in the Confidente today titled ‘BoN sees N$500m loss’, the central bank has offered the following responses to prior sent questions
The report show that the bank had a loss of over half a billion, this after posting a profit of over N$3,4 billion in 2015, what are the causes of this huge loss and what has the bank done to ensure these are curbed in the future?
In line with the requirements of International Financial Reporting Standards, in the Statement of Comprehensive Income translation gains or losses on the revaluation foreign currency denominated assets\liabilities are required to be disclosed as a separate line item. Revaluation gains/losses occur when the Namibia Dollar (NAD) appreciates or depreciates against other convertible currencies. In financial year 2015 the NAD depreciated significantly against other currencies with a resultant revaluation gain. In the same vein in financial year 2016 the NAD appreciated with the resultant revaluation loss. It is to be noted that the Bank of Namibia Act prescribes that such gains or losses should be transferred to the Revaluation Reserve Account. Accordingly, these gains or losses do not form part of our distributable profits. It is to be noted that such exchange rate movements are beyond the Bank’s control and determined by market forces. The Bank would therefore continue to have currency movement gains or losses being reflected in the financial statements.
Though the bank is still owed up to N$2,7 billion by Banco Nacional de Angola in the Kwanza deal, the bank made a fair value adjustment of up to N$83 million. What does this mean and does it mean the bank has forfeited this amount?
No, this does not mean that the Bank has forfeited the amount. The N$ 83 million is a notional charge, charged to the Income Statement to comply with the requirements of International Financial Reporting Standards which is the basis by which the Bank prepares its financial statements. Since the amounts owed by Banco Nacional de Angola do not attract market related interest, a fair value adjustment needs to be processed to comply with the accounting standard. Please note once again that this is a notional charge and will be reversed over the repayment period of the loan i.e. in financial years 2017 and 2018.
IMF securities are up by N$1,6 billion. Did the IMF give Namibia more money? Please clarify
The increase in the IMF Securities account is due to the 14th General Review quota increase that was effected on 24 February 2016 as well the annual Maintenance of Value adjustment that was processed in June 2016. The corresponding leg to these transactions is reflected under note number 12, Other Receivables.
I also notice that both the Governor and his deputy received a 42% salary increase. What is the banks view in this regard considering public outcries about these hefty salary hikes to public officials?
The Governor’s are contractually entitled to gratuity payments on expiry of their five-year term. For the financial year 2016, gross emoluments as reflected under note 29 includes their gratuity payments which were effected during December 2016. Thus, it is misleading to consider this a salary increase as you have stated in your question.
Confidente. Lifting the Lid. Copyright © 2015