Botswana eases monetary policy to support economy

30 Avril 2020

Gaborone, Botswana, April 30 (Infosplusgabon) - Central bank authorities in Botswana have reduced the country’s bank rate by 50 basis points from 4.75 percent to 4.25 percent.

“The current state of the economy and the outlook for both domestic and external economic activity provide scope for easing monetary policy to support domestic economic activity,” Bank of Botswana (BoB) Governor Moses Pelaelo said on Thursday.

The bank has also reduced the primary reserve requirement (PRR) from five percent to 2.5 percent.

According to Pelaelo, the reductions are expected to inject liquidity of approximately P1.6 billion (approximately US$130 million) into the banking system, which should allow commercial banks to be unconstrained in performing the necessary financial intermediation to support economic activity.

Latest projections by both the Ministry of Finance and Economic Development (MFED) and the International Monetary Fund (IMF) suggest a sharp deterioration in economic growth for Botswana in 2020.

The IMF forecast GDP to fall by 5.4 percent this year, before rebounding to 6.8 percent in 2021, while the MFED estimates that the economy will contract by 13.1 percent, and rebound to a 3.9 percent growth in 2021.

Meanwhile the country’s inflation has remained unchanged for the fourth consecutive month at 2.2 percent in March 2020, below the lower bound of the central bank’s desired medium-term objective range of 3 to 6 percent.

FIN/ INFOSPLUSGABON/RTF/GABON2020

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