Sunday, June 23, 2024

Private sector upbeat on spending this year — BOB

Bank of Botswana said this week that the private sector is expected to show greater appetite for credit during the course of the year as it gears to take advantage of the economic upturn that started during the second part of last year.

The Bank’s bi-annual survey, dubbed Business Expectation Survey that was undertaken during the month of September states that it expects “increased borrowing” by the private sector during the entire 2011.

The survey is carried out in March and September every year.

The private sector accounted 43 percent of the total P 21.7 billion in loans and advances by commercial banks (up to October) last year.

“There is modest, although growing, appetite for continued borrowing during 2011, with net balance for all categories (domestic, South Africa and elsewhere) rising significantly since the previous survey,” the report that was release this week said.

The report, however, indicated that Business Expectation Survey’s confidence is not blighted by the prospects of hikes in interest rates that might be put in place by the Monetary Policy Committee in a bid to bring inflation within its target range.

The Bank has set itself an inflationary target of three-to- six percent but has rarely met it.
“There is some expectation of interest rates starting to rise again in 2011(although further rate cuts in South Africa are expected in the first half of the year),” the report said.

However, head of Capital Asset Management, Leutlwetse Tumelo said he expects the Central Bank to be cautious not to annoy the apple cart in the sense of stifling the recovery in the economy.

“I do not think the interest rates will significantly go up this year because that might stifle the recovery in the economy,” he said.

Fifty-three point six percent of the respondents indicated that access to commercial banks credit is normal and 7.1 percent said it was easy while the remaining 39.3 percent said was tight. The findings were against what transpired in the previous surveys where respondent indicated that access to finance was the biggest stumbling block in doing business in the country.

Out of the firms that were questioned 53.6 percent said that they were going to draw from their war chest to fund their developments while 23.2 percent said they are going to look up to the commercial banks.

“The situation has been that a lot of companies rolled back some of their expenditure during the recessionary period and now they do have cash on their balance sheet which they can now use to fund their operations,” Tumelo said on Friday.

Further, he pointed out that people should not expect miracles in terms of job creation during 2011 as lot of emphasis will be on recovery and capital investment.

“I do not think we should expect the job creation to be at the pre-recession level what we should focus on is the economic recovery,” he added.

According to the report there was a mixed feeling about the Bank of Botswana inflation target with 62 percent saying it is reasonable and achievable and 21 percent questioned it achievability while the remaining boldly dismissed its achievability.

Inflation as measured under the Consumer Price Unit was at 7.2 percent last November the second lowest since September. The move left the bank rate at 9.5 percent.

Imported inflation and appreciation of the Rand against the Pula ÔÇô that has been gathering momentum-since the fourth quarter of 2010.

The Pula close the week Friday up 0.32 percent against the Rand at 1.0326 cents.


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