The MPC said in a statement that the decision was taken to contain persistently high growth in household credit, specifically that of overdrafts and instalment credit.
As a result, total credit extended to the private sector in 2014 increased by 9.7 billion Namibian dollars, compared to 7.4 billion Namibian dollars in 2013.
“MPC observed that a significant portion of new household credit is used to finance unproductive imported luxury goods, which continues to put additional pressure on the international reserves of the country,” said the MPC.
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The committee added that economic growth in the domestic economy has generally been positive during 2014 with declining inflation. However, declining commodity prices, the volatile exchange rate and the growing import bill remain its biggest risks.
Preliminary indicators during 2014 showed a widening trade deficit as a result of a higher import bill while the stock of foreign reserves declined on a yearly basis by 13.7 per cent to 16 billion Namibian dollars at the end of January 2015.
Despite this, the economy is expected grow by 5.6 per cent in 2015, compared to 5.3 per cent last year, driven mostly by construction activities in the mining sector.
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“Risks to growth remain largely the looming drought, weak growth in economies of some of Namibia’s major trading partners and depressed commodity prices. The latter could negatively affect export earnings, mining sector profits and employment.”
Annual inflation dropped from 6.1 per cent in June 2014 to 4.5 per cent in January 2015, driven by lower inflation for food, transport and housing categories. Overall annual inflation is expected to remain low during 2015.
The next MPC meeting is set to take place on the 14 April 2015.