Namibia continued to use the South African rand which it had used for many years in its status as a colony, but issued its own currency in 1993 (sharing legal tender status with the rand). Its financial system facilitated non-monetary financing of fiscal deficits, but monetary policy remained largely subordinate to that of South Africa.

YearsTargets and attainmentClassification
1990-93independence (from South Africa, SA) 1990, with highly unequal economy integrated with SA; given longstanding use of SA rand as only currency, de facto membership of Common Monetary Area becomes de jure 1992/1993, with SA paying compensation for seigniorage forgone by use of rand; relatively deep and liberal financial system includes five commercial banks and various nonbank financial intermediaries, strong in modern sector but little presence in rural areas; no organised money or capital markets; central bank set up 1990, initially with limited remituse of another sovereign’s currency UASC
1994-2017late 1993 central bank issues fully-backed notes and coin of Namibian dollar, which becomes dominant currency for bank claims and major currency in circulation; Namibia commits to 100% backing of its dollar by deposits at South Africa Reserve Bank, has minimal input into SA Reserve Bank decisions and no control over its exchange rate with the rest of the world, and applies SA exchange controls, but SA continues to compensate Namibia for seigniorage forgone by use of rand; treasury bills issued from 1991, government bonds from 1992, both held mainly by nonbanks; central bank does not issue own securities, or lend directly to government or hold government securities, but from 1997 it provides overdraft facility to government; late 1997 central bank gets more independence, stronger supervisory role, and power to set reserve requirements; both scope for monetary policy and monetary instruments remain nonzero but limited; problem of recurring capital outflow to SA, despite policies such as domestic asset requirement for growing nonbank financial institutions, leading to low level of international reserves; 2008 repo facility becomes main monetary instrument, bolstered by higher central bank bill issues; increasing focus on credit growth and financial stability, and on low forex reservesaugmented exchange rate fix AERF

Selected IMF references: RED 1991 pp37-45; RED 1993 pp24-5, 29, 32; SR 1993 pp12-13; SR 1994 pp13-14; REDSEI 1995 pp73-4, 82; RED 1997 pp32-3, 38; SR 1998 pp12-13; SR 2000 p8n; SISA 2003 pp17-18; SISA 2005 pp42-4; SISA 2006 pp49-53, 62; SR March 2006 pp22-3; SR December 2006 pp11-13; SISA 2008 pp17-27, 33-4; SR 2009 pp8, 18-20; SR 2010 p17; SR 2015 pp12-17; SI 2016 pp11-17, 40-2. Other references: Wolf et al. (2008, p. 46); Masson and Pattillo (2005, pp24-6, 65-6); Bank of Namibia (2020).

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