Wednesday, April 24, 2024

Botswana’s economy to recover modestly in 2016 ÔÇô BoB

The Central Bank expects the economy to register a low positive growth rate in 2016 at the backdrop of a modest recovery. This is in contrast to the optimistic growth rate that the Finance Minister Kenneth Matambo announced earlier this year during the 2016/17 national budget speech which he estimated at the roughly mid-single digit of 4.2 percent.  

Addressing the media on the bank’s operations and economic developments that happened in 2015 on Monday Bank of Botswana (BoB)’s Research and Financial stability Director, Dr. Kealeboga Masalila shared as one of the contributing factors for the modest recovery that the lower mining production resulted in the contraction of Gross Domestic Product (GDP).  Dr. Masalila attributed the contraction of GDP to the uncertain and sluggish global economic activity particularly within the commodity market. He however stated that there was marginal improvement for major economies, led by the USA whereas the EuroZone and Japan expanded at slower rates.  

In  particular reference to Botswana Dr. Masalila highlighted that Botswana registered lower exports compared to imports and in addition experienced a depreciation of the Pula against major international currencies. The depreciation, he said, resulted in higher value of the foreign exchange reserves in Pula terms whereas it registered a lower value in US Dollar terms. With regard to inflation Dr. Masalila announced that the bank will implement a 0.38 percent upward rate of crawl which he said reflects gains in reducing domestic inflation. He highlighted that inflation decreased from 3.8 percent in December 2014 to 3.1 percent in December 2015, citing that inflation fluctuated around the lower end of the bank’s 3 to 6 percent objective range. He added that the bank expects inflation to move around this level in 2016. As at April 2016, he mentioned that inflation was recorded at 2.8 percent.  

On the bank’s financial results and operations Dr. Masalila said the bank’s net income was recorded at P9.1 billion in 2015, higher than P4.1 billion in 2014. He added that there was a higher contribution of revaluation gains to net income due to depreciation of the Pula. On the bank’s liabilities, BoB Certificates increased from P4.2 billion to P8.2 billion while balance on government investment account fell from P37.3 billion to P35.5 billion. In terms of assets he said that they were registered at P85.4 billion in 2015 (P79.7 billion in 2014) as foreign exchange reserves increased from P79.1 billion to P84.9 billion which reflects a growth rate of 7.3 percent. 

Dr Masalila also spoke of the capital markets where P15 billion government bond programme remains in place and added that it supports market development and can be a source of government funding.“There is additional domestic borrowing by government and other public sector entities could contribute to beneficial use of excess liquidity,” he said.

Regarding the payments system he said there was ccommissioning of the Botswana Automated Clearing House in February 2015; clearing cycle reduced to 2 days. He also observed that there was growth in new payment methods and technological developments and electronic funds transfers, reduction in cheque payments. “Upgrade of the bank’s computing and information systems and security features in line with innovation and technological advancements,” said Dr. Masalila.


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