05 Feb 2013

Finance and Development Planning Minister, Mr Kenneth Matambo told Parliament that there was a decrease in foreign exchange reserves.

In his 2013/14 Budget Speech, Mr Matambo said at the end of December last year, foreign exchange reserves amounted to P57.7 billion, down by 4.3 per cent from P60.3 per cent same period in 2011. 

He explained that the marginal decrease in foreign exchange reserves was mainly a result of a reduction in diamond exports receipts, which declined by 21.9 per cent during the same period.

In US Dollar terms, he said the reserves declined by 8.6 per cent to USD7.4 billion while in SDR they fell by 9.4 per cent to SDR4.8 billion.

The Minister said the overall balance of international payments was a surplus of P3.4 billion following substantial deficits of P4.6 billion and P6.5 billion in 2009 and 2010 respectively. 

“The surplus for 2011 is partially attributed to the recovery in world diamond market prices and higher SACU receipts, which included an additional P2.5 billion adjustment for an earlier SACU underpayment. However preliminary estimates of the overall balance of payments indicate a deficit of P1.5 billion for 2012,” he said. 

He also noted that the Bank of Botswana has maintained the bank rate at 9.5 per cent since December 2010 to foster economic growth and enhance competitiveness. “Inflation was lower in 2012 than in the previous year.” The national year-on-year inflation rate was 7.4 per cent in December 2012 compared to 9.2 per cent in December 2011. 

“What is particularly notable is that the Core Inflation Rate, which excludes administered prices such as those of petrol, water and electricity, persistently remained below the overall Consumer Price inflation rate for 2010, 2011 and 2012 running near the upper end of BoB’s medium term objective inflation range of 3-6 per cent.”

Furthermore, he noted that the fastest growing sectors in 2011 were construction, general government and trade, hotels and restaurants, which grew in real terms by more than 10 per cent.

Preliminary data for the four quarters through to September 2012, he said, indicated that in real terms GDP grew by 7.7 per cent compared to 7.3 per cent over the same period in 2011. Again, he said, the mining sector declined by 12.5 per cent.

Given uncertainties surrounding the mining sector, the Minister said there had been growth in the non-mining sector.  However, he said there was a need to grow the potential of the non-mining sector. ENDS