Seven Day Repo

The seven-day refinancing facility, based on repurchase agreements (repos), is the main system of providing short-term liquidity accommodation to banking institutions. The objective of the Bank of Namibia’s seven-day repo facility is to ensure that liquidity provision to banking institutions is administered in a timely and effective way and within the agreed service levels. The interest rate charged on this facility is the prevailing repo rate. As part of its monetary operations, the Bank conducts weekly fixed-rate repurchase auctions with one-week maturities. These auctions are customarily held on Wednesdays.

 Overnight Repo

An overnight repo facility is available to banking institutions through the Bank of Namibia’s system of accommodation. A rate is charged on the overnight repo. This rate, which is reviewed periodically by the Bank, is set above the ruling repo rate in order to encourage activities in the interbank lending market.

 Intraday Lending

The Bank of Namibia offers intraday liquidity assistance to commercial banks through the Namibia Interbank Settlement System (NISS). Intraday loans are repaid on the same day the transaction takes place. No interest is charged on the intraday lending facility.

 Eligible Securities

The Bank of Namibia does not undertake any uncollateralised lending. As such, to utilise the aforementioned accommodation facilities, collateral must be pledged by the participating institutions. Once sufficient collateral has been secured, the Bank transfers funds via the NISS; the banking institutions will do the same in the event of a reverse repo. The two categories of eligible securities which commercial banks must pledge to utilise the lending facilities of the Bank of Namibia are as follows:

Category 1 Securities:

• Government of the Republic of Namibia Treasury Bills
• Government of the Republic of Namibia Internal Registered Stock
• Bank of Namibia Bills
• Securities fully guaranteed by the Government of the Republic of Namibia
• Separate Trading of Registered Interest and Principal of Securities (STRIPS) (stripped by the Government settlement)

Category 2 Securities:

• Investment Grade Debt Securities of state-owned enterprises (e.g. NamPower bonds)
• Separate Trading of Registered Interest and Principal of Securities (STRIPS) (not stripped by the Government settlement).