Africa-Press – Botswana. Bank of Botswana (BoB) plays a key role in supporting national development and raising the living standards of citizens, President Dr Mokgweetsi Masisi has said.
Speaking at the official opening of the BoB’s re-developed PulaThebe building in Gaborone on Wednesday, President Masisi said it was important to recognise that before the issuance of the country’s currency in August 1976 the absence of a central bank and monetary independence meant that there was a gap in the discretionary policies needed to pursue and achieve the nation’s development agenda.
“Specifically, we lacked autonomy in formulating monetary and exchange rate policies. In essence, we had incomplete instruments for policy- making and the comprehensive design of frameworks for heightened progressive nation-building, development and raising of living standards,” he said.
The establishment of the central bank and issuance of own currency, President Masisi said, enabled the exercise of discretion over monetary and exchange rate policies.President Masisi noted that a big driver of measured economic growth (GDP) in the early years of independence was government spending on the delivery of infrastructure, provision of utilities such as electricity as well as building facilities for social services.
He said BoB together with other regulators of the financial service sector, ensured patronage of the domestic financial sector through the maintenance and enforcement of regulatory and supervisory frameworks.
Dr Masisi stated that the bank ensured flawless operation of the payments and settlement of infrastructure developments and created a platform for conducting transactions using the Pula and its representation in other payment formats.
“The effective execution of this oversight function and responsibility by Bank of Botswana provided a fiscal environment that supported the expansion of economic activities through enabling savings and provision of credit as well as facilitating the conduct of transactions and enabling international trade,” he said.
He said one way of illustrating the immediate and direct impact of the role of Bank of Botswana in the day-to-day lives of individuals was in respect to sustaining price stability and preserving the purchasing power of the Pula currency by keeping the rate of inflation low, stable and predictable.
“As a result of this effectiveness by the bank, cash for normal household purchases continues to fit in a wallet and is counted in 100s of Pula or at most, very low thousands and never in millions and we have never had an occasion to reduce zeros,” he said.
President Masisi highlighted that Botswana never experienced the anguish of hyper-inflation due to the effectiveness of BoB’s monetary and exchange rate policy, the latter commonly known as the crawling rate of exchange across a basket of currencies.
Accordingly, he said through the conduct of monetary policy and maintenance of price stability, the bank also ensured that the value of wages, profits and other incomes were not subject to rapid erosion by inflation.
He highlighted that a rate of increase in prices which was lower than or comparable to other countries, also meant that the domestic industries could maintain price competitiveness in foreign markets and against imports.
Like all central banks, President Masisi said, the public good that BoB was assigned by the nation through government was the issuance of the national currency and the safeguarding of its value.
“In more formal terms, the mandate is to ensure and sustain the role of Pula and Thebe as a unit of account, a means of exchange, a measure as well as store of value; that is trusted and accepted domestically and internationally in exchange with other currencies,” he said.
He said through the management of foreign exchange reserves and implementation of exchange rate policy, BoB ensured seamless exchange of the Pula for other currencies, in order to pay for imports and other external obligations, thereby, maintaining fiscal stability in foreign transactions.
Additionally, President Masisi said the value, trust and confidence in the Pula was also reinforced through continuous availability of clean bank notes and coins as well as maintenance of integrity of payments systems and the availability of foreign exchange reserves for international trade, all under the stewardship of BoB.
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