SOUTH AFRICA: Botswana's Central Bank Governor sees 2010 growth at three to five percent

Record ID: 453139

  • Title: SOUTH AFRICA: Botswana's Central Bank Governor sees 2010 growth at three to five percent
  • Date: 26th May 2010
  • Summary: JWANENG, BOTSWANA (FILE) (ORIGINALLY 4:3) (REUTERS) VARIOUS OF MINE VARIOUS OF DIGGERS MOVING EARTH AT THE DIAMOND MINE VARIOUS OF WOMAN LOOKING AT DIAMONDS THROUGH MICROSCOPES
  • Embargoed: 10th June 2010 13:00
  • Keywords:
  • Location: South Africa
  • Country: South Africa
  • Topics: Finance
  • Reuters ID: LVA11OK5AGTD7FPRG04SBY64NGCA
  • Story Text: Botswana's economy is expected to grow by between 3 and 5 percent this year due to a recovery in the key diamond mining sector, Central Bank Governor Linah Mohohlo said on Tuesday (May 25).
    "Things are looking up in Botswana. We expect to get positive GDP growth, very low numbers compared to what Botswana is used to. I think the forecast suggests that it could be anywhere between three and five percent for the whole of 2010," Mohohlo told Reuters on the sidelines of a conference in Johannesburg.
    "And this is because the mining sector, primarily diamonds, is in full swing. We've opened all the mines, since April this year," Mohohlo said.
    Mohohlo's growth forecasts are below those of analysts, who projected median growth of 5.4 percent in a Reuters poll published this week.
    With diamonds accounting for 40 percent of output, Botswana was particularly hard-hit in the financial and economic crisis that rippled across the world from late 2008.
    For the first time in the industry's 40-year history, gem mines in the landlocked southern African nation were forced to close as the price of diamonds collapsed, leading to an estimated overall contraction for the year of 6 percent.
    Mohohlo declined to give any GDP projections for 2011.
    "I don't want to talk about guesstimates, I'd rather confine myself to the year that has still got more than six months to go," said Mohohlo.
    Mohohlo also said she was "not surprised" by a quickening of inflation to 7.1 percent year-on-year in April from 6.0 percent in March, attributing it to the rise in value-added tax.
    "I am not surprised, this is something you will have found us having forecast in the monetary policy statements and we did indicate that inflation during the course of 2010 will rise beyond parameters of three to six percent. And primarily not just VAT, there are certain prices over which the bank has no control," said Mohohlo.
    The Bank of Botswana, which held its key lending rate at 10 percent in April, has forecast inflation to stabilise inside its 3 to 6 percent band in the medium term after slowing sharply from a peak of 15.1 percent year-on-year in August 2008.
    The collapse in diamond revenues for the first time forced Botswana's government, widely regarded as one of the sub-Saharan Africa's savviest administrations, to consider alternative funding sources to precious stones.
    It launched a 15-year domestic bond in March with a coupon of 8 percent, and there are no limits on foreign ownership, making it a relatively attractive high-yielding frontier market for international investors.
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