Liquidity tightens in banking system

A bank’s liquidity refers to its ability to meet all anticipated obligations such as funding loans or debt payments using available funds without having to liquidate other assets.

Although consolidated data on recent months’ banking system liquidity have not yet been released by the Bank of Botswana (BoB), analysts say liquidity in the overnight inter-bank money market dropped to very low levels in late 2016 and early 2017. “There could be several drivers of this, including expenditure by parastatals prior to the end of the government fiscal year, and capital outflows. In view of the emerging interest rate differential between Botswana and South Africa (where rates have been rising), and the strengthening South African rand, such outflows are to be expected,” reads a market report from Econsult.