ESP to boost banks� liquidity � IMF

ESP projects are expected to inject up to P3 billion into the economy in the next two years PIC: MORERI SEJAKGOMO
ESP projects are expected to inject up to P3 billion into the economy in the next two years PIC: MORERI SEJAKGOMO

The International Monetary Fund (IMF) believes that the drawdown on government deposits to stimulate the economy is expected to help banks liquidity positions and consequently boost credit growth.

The institution’s optimism, however, seems to go against the current outlook, with interest rates being at record low levels since 2015 and credit growth declining as commercial banks adopted a cautious approach to lending in the context of slow growth in customer deposits and increasing competition to raise funds.

In a Botswana report published recently, the IMF said the change in fiscal policy is expected to enhance monetary policy transmission by releasing commercial banks’ liquidity constraints through increased deposits in this way supporting domestic demand.

Editor's Comment
Botswana at a critical juncture

While the political shift brings hope for change, it also places immense pressure on the new administration to deliver on its election promises in the face of serious economic challenges.On another level, newly appointed Finance Minister Ndaba Gaolathe’s grim assessment of the country’s finances adds urgency to the moment. The budget deficit, expected to be P8.7 billion, is now anticipated to be even higher due to underperforming diamond...

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