Nam forex reserves slump
Windhoek – Namibia’s central bank says international reserves fell quarter-on-quarter and year-on-year by 7.1 percent and 1.7 percent, respectively, to R14.5 billion due to a widening trade balance and increased net payments abroad.
Import payments increased by 10.1 percent quarter-on-quarter and 21.6 percent year-on-year during the same period.
“As a result, the import cover reduced to 9.56 weeks during the first quarter of 2014 from 12.07 weeks in the same quarter in 2013, the central bank said in its economic quarterly review.
Rapid increase in import payments, which is not in line with increase in exports, continues to pressure Namibia’s current account. The overall balance of payments recorded a deficit due to the widening current account deficit and a decrease in surplus in the capital and financial account.
The deficit in the overall balance of payments was R1.1 billion, despite the bank having recorded a surplus in the preceding quarter.
“This deficit was a result of a rising current account, which originated from a widening merchandise trade balance and net payment in services category. Although imports rose quarter-on-quarter, exports however declined. This contributed to a higher deficit in the trade balance and consequently led to a further deterioration of the current account balance,” the central bank said.
The current account deficit widened to R4.1 billion during the quarter, from R2 billion during the same quarter in 2013. On a quarterly and annual basis, merchandise trade balance rose by 64.6 percent to R7.3 billion due to “relatively higher import bill in relation to exports”.
The value of imports surged by (quarterly) 10.1 percent and (yearly) 21.6 percent whilst on a quarterly basis, exports shrunk by 11.1 percent to R10.2 billion.
The fall in exports during the period under review is reflected in shrinking minerals exports, mainly diamonds and uranium, during the quarter.
Diamond export earnings slumped by a staggering 36.1 percent to R2.1 billion due to a 37.9 percent decrease in volumes exported.
The bank said the fall in exports to 300 000 carats during the quarter is ‘substantial’. Yearly, diamonds exports rose marginally by 9.2 percent, a result of a depreciating Namibian currency against the US dollar.
Namibia is the global leader in offshore diamonds mining and the fifth global producer of uranium.
Diamonds production rose a marginal 0.6 percent during the quarter but registered a 7.5 percent decline yearly to 431 816 carats.
But hit by a slump in prices, uranium exports fell by 19.8 percent to R1.3 billion during the quarter due to a 15.9 percent (1 529 tonnes) decrease in exported volumes.
On a yearly basis, uranium exports rose by 15.7 percent, the central bank says. Production of the metal fell by 10.4 percent to 1 132 tonnes during the quarter “due to equipment failure at one of the mines, which affected mining activities for about three weeks” while on a yearly basis, output fell by 15 percent.