21 Aug 2018

Global economic activity gained momentum in 2017 with a 3.8 per cent growth compared to 3.2 per cent in 2016.

Giving a presentation on the economic outlook of the country and Bank of Botswana (BoB) financial results to the Francistown business community on August 20, the bank’s chief financial officer, Mr Daniel Loeto attributed the growth to advanced economies that registered stronger global demand and trade.

He said emerging market economies were led by robust economic performances in countries such as China and India, adding that the low interest rate environment continued hence low returns on bonds, strong growth in stock markets as well as the appreciation of the Pula against the US Dollar

However, Mr Loeto explained that although the domestic market looked better, there was  uncertainty and a likelihood of inward-looking policies which remains a challenge.

He said the Bank of Botswana made a net income of P739.5 million, and that it was far much lower that the P1.4 billion registered in 2016 due to the less realised fair value gains and currency revaluation losses.

He said P1.9 billion was distributed to government in 2017 as compared to P3.6 billion in 2017 after a transfer of P1.1 billion from the currency revaluation reserve.

Mr Loeto noted that the distribution comprised of P708 million as pre-set dividend, P298 million in excess over pre-set dividend and P865 million in residual income.

He further noted that P1.6 billion in interest and dividends was earned on investments in 2017 as compared to P1.7 billion in 2016.

He also said P1 billion was gained on the sale of bonds and shares against P2.5 billion in 2016.

He added that administration costs increased from P498 million in 2016 to P552 million in 2017.

Regarding assets and liabilities, Mr Loeto stated that assets decreased from P77.6 billion in 2016 to P74.3 billion in 2017 as foreign exchange decreased by 4 per cent from P76.8 billion to P73.7 billion respectively.

He attributed the decrease in reserves to net foreign exchange outflows which stood at P5.8 billion and net currency revaluation losses of P2 billion.

Under liabilities, the chief financial officer stated that the balance on government investment account increased from P29.1 billion to P30.8 billion while the Bank of Botswana certificates decreased from P7.9 billion to P6.3 billion.

He also told the business community that government domestic borrowing increased from P9.3 billion in 2016 to P10.2 billion in 2017.

He added that additional domestic borrowing by government and other public sector entities could contribute to the beneficial use of excess liquidity and market development.

He noted that settlement services were provided in a secure, robust and efficient manner through the Botswana Inter-bank Settlement System (BISS).

On other issues, Mr Loeto said a decision has not been made whether all bank notes would be changed from paper to polymer following  the introduction of the P10 polymer note in February to help increase the durability of the banknote in circulation.

BoB governor, Mr Moses Pelaelo said the bank has modernised its laws on governance and adopted world financial standards. ENDS