Foreign reserves buffer remain solid - BoB govern
Pauline Dikuelo | Tuesday November 29, 2016 16:21
Import cover measures the number of months a country’s available foreign exchange reserves in the central bank can cover the cost of imports.
Officially opening the just ended Global Expo and 4th Investment and Trade conference, Moses Pelaelo said Botswana’s foreign exchange reserves currently amount to U$7.4 billion (P76 billion) representing 18 months of import, which is equivalent to 53% of the GDP.
Pelaelo said prudent fiscal management underpins the external position of Botswana and robust institutional framework is further attested by international rating agencies.
“Judicious management of foreign exchange reserves for a country dependent on trade also ensures uninterrupted access to foreign currencies to sustain business operations as necessary,” he said.
The governor said it is clear that the maintenance of buffers and application of fiscal rules by the government has helped to ensure continued support of the economy even when the flow of government revenue is insufficient as a result of the vagaries of the international market for Botswana’s exports.
Further, he stressed that it is important for Botswana to take advantage of progressive international and regional trade agreements and integration arrangements to promote industrialisation.
“Ultimately, facilitative rather than obstructive interaction between business and supportive institutions, regulatory bodies and government officials, should help in unlocking opportunities for economic growth that are inherent in business operations, entrepreneurship and an innovative spirit,” he said.
For his part, former South African Reserve Bank Former Governor Tito Mboweni said Botswana has neglected agriculture, noting that it has the potential to economically sustain the nation thus contribute to the GDP.
“Botswana has not been doing enough in agriculture despite its capability and something better must be done to build capacity in this industry. It is high time Botswana thinks of other things that can give the country a competitive edge,” he said. According to Mboweni, the biggest challenge that Botswana is facing, just like any African country is access to capital, noting that many African countries must maintain credit ratings to allow market penetration.
In addition, he suggested that African countries need to enter into discussions on how to package infrastructure projects that can be submitted to BRICS on a regional level highlighting that collaborations are crucial.