Bank of Botswana (BoB) say they are not too worried about the current downgrade of South Africa’s credit ratings, otherwise labelled ‘junk status’, as they leave no changes in the current bank rate.
The bank’s Governor, Moses Dinekere explained that these credit ratings could potentially limit private investment in the country.
“Regionally, the recent downgrade of South Africa’s credit rating to sub-investment grade could potentially undermine growth by constraining private investment and household consumption.
“Potential negative spillovers into Botswana include higher inflation, lower exports and SACU revenue, although the risks should be moderate overall,” he said.
Meanwhile, after their quarterly meeting, BoB shared with the media that they have decided to maintain the bank rate, which will remain at 5.5 per cent.
Speaking at a recent press brief, Dinekere said the outlook for price stability remains positive as inflation is forecasted to remain within the 3 to 6 per cent mark.
“Inflation increased from 3.4 per cent in February to 3.5 per cent in March 2017, reflecting the upward adjustment in fuel prices. The projected modest increase in the short-term is due to higher electricity, water tariffs and international oil prices,” he revealed.
According to the BoB committee, because of the improvement in diamond trade, the GDP in Botswana grew by 4.3 per cent.
He said that the mining output registered a slower rate of 3.7 per cent in 2016 when compared 19.6 per cent in 2015.
“It is projected that domestic non-mining output will be below trend in the near term, constrained by continued low growth in household income, the subdued rate of increase in government expenditure and restrained economic growth in major trading partners. However, gradual economic recovery is expected in the medium term in response to anticipated improvement in external economic conditions.” explained Dinekere.
Their next meeting has been set for June 20.