Namibia Raises Repo Rate to 7%

Bank of Namibia Governor, Ebson Uanguta has announced a 25-basis-point increase in the repo rate up from 6.75 % to 7.00%, pushing the prime lending rate to 10.50%.

This comes at a time where the country is experiencing rising fuel prices, accelerated inflation and a widening trade deficit which puts pressure on the country`s economy.

Following its latest meeting, the Monetary Policy Committee (MPC) announced the increase, saying it is intended to safeguard the one-to-one link between the Namibia dollar and the South African rand and limit the inflationary effects of higher fuel prices.

Speaking at the monetary policy announcement on Wednesday in Windhoek, Uanguta said the central bank`s decision is also aimed at narrowing the interest rate gap between Namibia and South Africa to limit potential capital outflows and protect the country’s international reserves.

Uanguta said the policy stance was appropriate to “safeguard the one-to-one link between the Namibia Dollar and the South African Rand and mitigate against second-round effects induced by high fuel prices.”

The rate increase could raise borrowing costs for households and businesses, particularly those with loans linked to the prime lending rate, potentially affecting mortgage repayments, consumer spending and business investment.

Inflation accelerated to 5.4% in September 2026, one percentage point above the level recorded in June, largely due to higher transport prices. The bank projects inflation to rise from 3.5% in 2025 to 4.2% in 2026 before easing slightly to 4.0% in 2027.

Namibia’s merchandise trade deficit also widened to N$33.5 billion during the first eight months of 2026, compared with N$17.8 billion in the corresponding period last year, driven by increased imports, particularly mineral fuels.

Despite these pressures, Uanguta reported that international reserves rose to N$59.3 billion at the end of September, from N$58 billion at the end of July. The reserves provide an estimated 3.6 months of import cover.

The bank expects economic growth to improve from 1.7% in 2025 to 2.1% in 2026 and 2.8% in 2027, although foot-and-mouth disease, subdued global growth and potential El Niño conditions remain risks to the outlook.

The next MPC meeting is scheduled for 7 and 8 December 2026.