Surplus recorded in the first quarter of 2021
Financial account posted P2.4 billion surplus
Total exports collects P24.1 million,86.6% up
As government continues to grapple with pressure on its financial revenue streams, there was a sigh of relief in the first quarter of 2021 as a current account s recorded a surplus of P4.7 billion.
The Bank of Botswana (BoB) has disclosed the positive achievement on the Balance of Payments (BoP) status in its Monetary Policy Report for August 2021, noting that a surplus growth is very essential.
According to BoB, the current account’s estimated surplus of P4.7 billion in the first quarter of 2021, is compared to a revised deficit of P2.4 billion during the corresponding period in 2020.
“The surplus is attributable towards the positive balance of the P2.1 billion in the merchandise trade account and P5.7 billion in the secondary income account, the latter being dominated by the Southern African Customs Union (SACU) revenue receipts. Total exports increased by 82.6 percent from P13.2billion to P24.1 billion, while imports increased by31.7 percent from P16.7 billion to P22 billion, leading to a surplus of P2.1 billion in the merchandise trade account,” said the central bank.
BoB also said diamond exports, which have accounted for 93.7 percent of a total exports of goods in the first quarter of 2021, increased from P11.4 billion in the first quarter of 2020 to P22.6 billion in the first quarter of 2021, whereas diamond imports increased from P3.5 billion to P9.1 billion.
The increase in diamond trade mainly resulted from recovery in demand for diamond jewellery in Botswana’s key diamond markets of the United States of America (USA) and China respectively.
According to the bank, the other commodities that contributed to the increase in exports include gold (25.1 percent), Plastic and plastic products (24.7 percent), and iron and steel products (19 percent).
“Commodities that contributed to the increase in imports are metal products, chemical and rubber products and textiles and footwear that increased by 38.1 percent, 25.8 percent and 13.5 percent respectively,” said the central bank, reflecting in the status of balance of payments.
In addition, BoB said the financial account recorded a surplus in the first quarter of 2021. The financial account has registered an estimated surplus of P2.4 billion during the first quarter of2021, compared to the huge revised deficit of P3.4 billion in the first quarter of the year 2020.
“The surplus was mainly attributable to an increase in the offshore investments, particularly by pension fund managers. The overall BoP was in deficit by P904.3 million during the first quarter of 2021, compared to a big deficit of P4.9 billion during the corresponding period in 2020. The deficit mainly resulted from financing government obligations, such as a payments for imports, external loan servicing and funding of embassies,’’ said the Moses Pelaelo’s led bank.
The deficit, central bank said, mainly resulted from financing government obligations, such as payments for imports, external loan servicing and funding of Botswana embassies globally too.
Pelaelo recently said the bank anticipates a strong rebound on economy given that the short-term adverse developments in domestic economy occur against growth- enhancing environment.
Pelaelo, while briefing the media on the outcomes of the Monetary Policy Committee (MPC) meeting of last month, said the economy is showing some positive signs of recovery in 2021.
He noted the accommodative monetary conditions, improvements in water and the electricity supply, reforms to further improve the business environment and the government interventions against COVID-19, including positive news around the vaccination roll-out programme as the growth enhancing factors.