20 Feb 2025

Inflation is expected to remain below the lower bound of the 3-6 per cent objective range in the short term and revert to the objective range on a sustained basis from the second quarter of 2025.

Presenting the Bank of Botswana (BoB) Monetary Policy statement on Wednesday, governor , Mr Cornelius Dekop said the bank’s formulation and implementation of monetary policy would focus on entrenching expectations of low, predictable and sustainable inflation, through timely response to price developments, while ensuring that credit and other market developments were in line with durable stability of the financial system.

He said the BoB was committed to monitoring economic and financial developments with a view to ensuring price and financial stability without undermining sustainable economic growth.

“Broadly, the bank contributes to macroeconomic stability and policy congruence through the pursuit and attainment of its primary objectives and coordination with relevant institutions with respect to price and financial stability, as well as stability of the inflation-adjusted trade-weighted exchange rate,” he said.

By focusing and delivering on its specific roles, Mr Dekop said, BoB contributed to the maintenance of a conducive environment for structural reforms and transformation initiatives to gain traction, potentially leading to higher rates of growth needed to transition the economy to high income status.

He said immediate implementation of transformation initiatives and structural reforms were expected to raise prospects for faster growth and economic diversification given that monetary policy was accommodative.

It is against this background, that Mr Dekop stated that enhanced productivity and innovation including greater production capacity of industry and effectiveness of support institutions and service providers would help improve growth prospects for the economy in an environment of price and financial stability.

He said effective implementation and recognition of value and benefits required mindset change that discerned and harnessed the economic and welfare opportunities that could be derived from economic transformation and policy reforms, as well as conducive macroeconomic policies.

With regard to domestic economic prospects, Mr Dekop highlighted that growth prospects remained subdued and well below the long-term growth rate required to transition the country to high income status by 2036.

“Botswana’s real GDP is projected to expand by 3.3 per cent in 2025, from an estimated contraction of 3.1 per cent in 2024. It is anticipated that recovery in the mining sector and effective implementation of the economic transformation reforms would be supportive of economic activity, through facilitating expansion of productive capacity,” he said.

He said it was also anticipated that the performance of the non-mining sectors would improve, underpinned by among other improvements in electricity and water supply as well as diamond trading. ENDS