Thousands flock to banks for debt relief

PHILLEPUS UUSIKU – A total of 56 000 applications for debt relief have been filed with most commercial banks in Namibia since the onslaught of Covid-19.The approval rate was “exceptional” to support affected individual households and businesses, the governor of the Bank of Namibia (BoN), Johannes !Gawaxab, has said.Individuals took up roughly N$3.5 billion of debt relief, followed by retail, real estate and businesses, as well as the hospitality and tourism sector, !Gawaxab said in an interview with Market Watch.The BoN on Wednesday had its 7th and final monetary policy announcement for the year. After having done a thorough analysis on global, regional and domestic developments, it decided to leave the repo rate unchanged at 3.75%. That means the prime lending rates of local commercial banks will remain at 7.5%.The repo rate is the cost of borrowing by commercial banks from the central bank, while consumers borrow from commercial banks at a prime lending rate.“We don’t just decide to increase, decrease or leave rates unchanged. Financial and economic developments globally, regionally and in the domestic economy inform our decisions,” !Gawaxab stressed.The Monetary Policy Committee (MPC) of the BoN is of the view that the rate remains appropriate to continue supporting domestic activity while at the same time safeguarding the one-to-one link between the Namibian dollar and the South African rand.The domestic economy economic activity declined during the first ten months of 2020 and is estimated to register an overall contraction this year before it slowly recovers next year, !Gawaxab said.INFLATIONSince the previous MPC meeting, inflations rates have varied among the key monitored economies, but have remained generally low.Inflation is the persistent and general increase in the prices of goods and services. An increase in the prices of goods and services reduces the purchasing power of the domestic currency. Therefore, consumers will either be required to increase their budget if they wish to maintain the consumption or alternatively cut down on the consumption levels if they can’t afford.Annual average inflation declined to 2.2% during the first ten months of 2020 compared to 4.0% in the corresponding period of 2019.The lower inflation was due to decline in transport and housing inflation, mainly an account of deflationary emanating from the depressed rental market and low international price of oil, he said.CREDIT UPTAKEPrivate sector credit extension (PSCE) growth declined during the first ten months of 2020, while the stock of international reserves remained sufficient to support the currency peg.Average growth in PSCE declined to 3.6% during the first ten months of 2020, lower than the 6.8% recorded over the same period in 2019, the central bank governor said.The slowdown in PSCE was due to lower demand for credit arising from weak overall domestic activity and the repayments made by businesses during the period under review.The growth in credit extended to businesses declined to 0.8% during the first ten months of 2020 compared to 8.7% over the same period in 2019. Since the previous MPC meeting, growth in PSCE slowed to 1.4% at the end of October 2020 from 2.6% in August 2020, mainly due to a lower uptake of credit by businesses. - phillep@nmh.com.na

Thousands flock to banks for debt relief

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Republikein 2025-12-18

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Thousands flock to banks for debt relief

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