Namibia has said it will not seek external funding fr om multilateral lenders, citing a favourable liquidity condition on the domestic market.
With many countries resorting to external funding to shore up their liquidity po sitions, Namibia said its foreign currency reserves were in a strong position to buffer the country against the vagaries of the international market.
The International Monetary Fund (IMF) said that Namibia could benefit from about US$130.4 million Special Drawing Rights (SDR) allocation, which was specially s e t up to provide liquidity to the global economic system by supplementing the Fun d â?s member countriesâ? foreign exchange reserves.
The IMF said that SDRs allocated to members would count toward their reserve ass ets, acting as a low cost liquidity buffer for low income countries and emerging markets and reducing the need for excessive self-insurance. Minister of Finance Saara Kuugongelwa-Amadhila said that the SDR was an accounti ng arrangement which a member country could be able to draw upon if it so wishes .
Kuugongelwa-Amadhila said that Namibiaâ?s classification as a middle income eco nomy made borrowing from Bretton Woods institutions expensive. She said that Nam i bia would have to consider other options of raising capital, should the need arise.
â?We are not in a situation where we have to borrow from the IMF. Our capital m arket is awash with savings which we can utilise if the need arise,â? Kuugongelw a-Amadhila said in an interview.
The Bank of Namibia (BoN) said in June that its international reserves were arou nd R14.2 billion, adding that the reserves were sufficient to maintain its curre n cy peg with the South African rand. Namibiaâ?s dollar is pegged one to one with the South A frican rand. â?Liquidity conditions remain healthy with no adverse effects on ca pital flows foreseen,â? the BoN said in June.
Kuugongelwa-Amadhila said Namibia would only consider borrowing from multilatera l lenders when the funds are cheap.
â?We have to consider the ability of the government to pay interest and current ly there is no need to go out for the costly measures unless of course that fund i ng is cheap,â? Kuugongelwa-Amadhila said.
The IMF agreed to disburse the funds after central banks in some countries pumpe d money into the banking systems and markets to boost liquidity at the height of
the financial crisis. Namibian banks however remained relatively stable through the turmoil, although the Namibian dollar weakened slightly towards the end of 2008.
A local economist with securities firm SSS, Emil van Zyl, also echoed the same s entiments, saying Namibia did not have to borrow money from the Bretton Woods in s titutions.
â?There is no need for Namibia to borrow from Bretton Woods. The economy is sit ting with a lot of liquidity. There is no need for external funding. Banks are c u rrently sitting with a lot of money,â? Van Zyl said.