Gaborone, Botswana, August 9 (Infosplusgabon) - Botswana's Financial Stability Board (FSB) met on Thursday, deliberating on several markets, regulatory and public interest developments and on issues relating to stability, performance and prospects for the financial sector. The meeting, held in Gaborone, also focused on the macro-economic environment, with the financial sector deemed broadly stable and risks to financial stability limited. According to the FCS, the assessment of vulnerabilities, risks and conclusions were made regarding the global economic outlook which is expected to subside due to trade and geopolitical tensions as well as political uncertainty with a modest negative impact. on the national economy. According to the Financial Stability Board, weak regional results and unfavorable weather conditions are also contributing to dampening domestic growth momentum. The global response to slowing growth and moderating inflation involves keeping interest rates low and further easing monetary policy, led by major central banks, with the possibility of capital flows to deeper, more liquid and stable emerging markets. External sector vulnerabilities, namely trade shocks, capital outflows and adverse exchange rate movements that could present the greatest potential for high risks to financial stability, have been balanced against Botswana. Other vulnerabilities such as the possibility of excessive credit growth and leverage, maturity mismatches, liquidity management difficulties, and macro-financial linkages between banks and non-bank financial institutions were generally contained and posed minimal risk to financial stability. Excessive maturity mismatches and, on occasion, structural excess liquidity would continue to hamper the orderly management of market liquidity. The rate of credit growth remains aligned with the outlook for output and income growth, but continues to be strongly skewed towards the household sector. The financial health of the corporate sector remains strong, although there have been isolated high-profile closures and threats to business viability. Credit to the corporate sector relative to the size of the economy remains low by international standards. The real estate market should continue to perform well despite an equally low sectoral credit-to-GDP ratio. The absence of an organized real estate market and a publicly available house price index limits price discovery and activity in the mortgage market. The structure of deposits and the concentration of funds remain skewed in favor of the corporate sector, institutional investors and large depositors. There would be no immediate concerns, but there may be occasional liquidity management issues, particularly for individual banks, which could impede the transmission of monetary policy. A less diversified and predominantly short-term base for deposits and volatile funds also hurts long-term financing for businesses, projects and infrastructure.

The FSC says governance and accountability issues of some non-bank financial institutions, which have arisen over the past two years, are being addressed through regulatory and oversight measures, as well as ongoing investigations and prosecutions. , as appropriate. Therefore, the risks of loss of funds and financial instability emanating from the sub-sector remain low. The Financial Stability Board alleges that the respective regulators will continue to enforce and enhance measures aimed at improving the professional and ethical conduct of individuals and businesses in the financial services industry by promoting governance frameworks that will guide behavior financial institutions, reinforcing individual fiduciary responsibility and reliability, including strict enforcement of “fit and conform” obligations. FSC says there is a need to introduce accountability mapping to ensure individuals are held accountable for their actions, tackling the phenomenon of 'bad apple rolling' which involves those accused of misconduct institution who end up at another financial institution without disclosing their past misconduct. Financial institutions are encouraged to establish and maintain, for the industry, a list of personnel terminated or relieved of their duties for engaging in wrongdoing, dishonesty or other forms of misconduct serious. In addition, regulators regularly reassess the suitability and propriety of employees who perform duties deemed likely to cause material harm to the financial institution or its customers and encourage the private sector to respond to misconduct. in the financial system. While Botswana remains on the Financial Action Task Force (FATF) list of jurisdictions with strategic deficiencies in the fight against money laundering and terrorist financing, the authorities continue to put implement the action plans required to remedy the shortcomings identified. The payment infrastructure remains stable, with the orderly welcome of new payment platforms and methods, particularly following the enactment of the Electronic Payments Regulation. The 2019 Financial Stability Report, which will be released in September 2019, contains a comprehensive analysis and discussion. The Council also started the discussion on a deposit protection fund and concluded the consultation on the supervised monetary policy framework. The framework outlines possible policy and situational measures that could be taken to address the evolving situation, including prescriptions for loan-to-value ratio, debt-to-income ratio and debt-service ratio, as measures or tools to promote safe and sound lending practices.