GOVERNMENT INSTITUTIONS PENSION FUND NAMIBIA • FINANCIALS

The performance of the Government Institutions Pension Fund (GIPF) showed a marked decline in performance relative to previous years, but nevertheless ended the year on a positive note. At the end of the reporting period the Fund had grown by 5,4% from N$33.6 billion at the end of March 2007 to N$35.6 billion at the end of March 2008.

This performance is consistent with the considerable degree of volatility experienced on markets around the world, including our region, brought about by what has become known as the credit crunch, or sub-prime crisis. The securitisation of sub-prime housing market loans in the US resulted in financial institutions across the world holding assets that turned out to be of far poorer quality than first thought, resulting in a severe global liquidity crisis. The credit crunch coincided with a tremendous and unexpected global rise in the prices of key commodities, including basic foodstuffs and crude oil, resulting in inflationary pressures around the world. This.left monetary policy makers in major economies with a difficult choice between reducing interest rates to stave off recession and increasing the cost of borrowing to combat inflation.