02 Feb 2015

The domestic macroeconomic environment has remained stable with positive outlook as shown by the performance of the main economic indicators such as economic growth, inflation and monetary policy, balance of payments and exchange rate movements. 

This was disclosed by the Minister of Finance and Development Planning, Mr Kenneth Matambo when delivering the 2015/16 budget speech in Parliament today (February 2). 

Mr Matambo explained that the performance of these variables reflected the impact of previous and current government policies and strategies to drive the economy.

“A positive macroeconomic environment was confirmed by the Moody’s Investors Service assessment of Botswana’s credit profile in terms of its economic, institutional and fiscal strength as well as susceptibility to event risks. The agency rated Botswana A2 in 2014, with a stable outlook. Among the key credit strengths for these rating was the government’s robust balance sheet, as indicated by its fiscal surplus and low debt levels. 

The report endorsed government’s prudent approach to fiscal policy and the effectiveness of its consolidation measures going forward.  This positive domestic economic environment is favourable for private sector development, which should be the source of growth and unemployment creation in the country,” he said.

The minister said the real GDP registered a growth rate of 5.8 per cent in 2013 compared to the 4.3per cent growth in 2012. He said the non-mining sectors collectively registered a positive growth rate of 5.0 per cent in 2013. 

“Domestic inflation rose from 4.1 per cent in December 2013 to 4.6 per cent in August 2014 and has since declined to 3.8 per cent in December 2014 remaining within the Bank of Botswana’s (BoB) objective range of 3-6 per cent, the projected external price development and lower forecasts for oil prices will result in moderate pressure on domestic prices. Therefore, inflation is expected to remain within the Bank’s objective range in the medium term,” he said.

Mr Matambo said with the positive medium term inflation outlook and credit developments, the BoB continued to maintain an accommodative monetary policy stance during the year. He said the bank rate was maintained at 7.5 per cent in 2014, after it was last adjusted downwards by 50 basis points in December 2013. 

He said the commercial bank credit grew by 14.0 per cent from P39.4billion in November 2013 to P44.9million in November 2014 which was supportive to economic growth.

Mr Matambo said the balance of payments continued to record strong performance during 2014. He said preliminary estimates indicated that the current account of the balance of payments registered a surplus of P13.1billion in 2014 a moderate increase of 1.5per cent from the P12.9billion in 2013. 

He attributed the growth to increase in receipts from SACU which increased from P13.8billion in 2013 to P15.0billion in 2014. He said the positive overall balance of payments contributed to the increase in foreign exchange reserves. ENDS