GABORONE - Government is concerned about the possibility of the global financial economic crisis spreading to the non-mining sector, which employs a large number of people.

Speaking at the High Level Consultative Council (HLCC) meeting in Gaborone yesterday, President Lt Gen. Seretse Khama Ian Khama said as a way of addressing the challenges brought by the economic situation, government announced a broad stimulus budget for the current financial year while at the same time taking measures to contain expenditure.

In this regard, President Khama said the budget catered for projects such as labour intensive public works as well as major electric power generation, roads, telecommunications and water, which he said were expected to have a significant growth impact in the short, medium and long term and create employment.

President Khama said government remained committed to the crawling peg exchange rate, which he said had been kept in line with the inflation differential between Botswana and its trading partners.

Bank of Botswana has reduced interest rates following the reduction of rate of inflation. The government has been able to secure a P10 billion loan from African Development Bank (AfDB) and the president said it was offered at market rates, which were at a record low and on generous and flexible repayment terms to assist the country during the period of crisis.

Talking about performance of the non-mining sector, the president said it had evidenced remarkable growth during the global financial crisis, saying sectors such as construction, wholesale, retail, banking and financial service had all reflected growth.

I am particularly pleased that our banking and financial services have done well as after all this same sector was responsible for initiating the global financial crisis in developed economies. It demonstrates that our banking and financial services sector is well regulated and was able to respond to the stimulus package, he said. The president however said government was concerned with the negative impact on textile exports saying there had been losses of export markets common in most textile exporting countries, which subsequently resulted with loss of employment.

Other sectors however have demonstrated confidence through their growth and President Lt Gen. Khama said one needed confidence to face difficult times.

He said he was glad the stimulus package had had the desired effect in assisting with the growth in the non-mining sector.

The diamond market has recovered and the president said Orapa and Letlhakane mines were re-opened in April while Orapa Number Two plant was re-opened in July to cater for demand in the global diamond market. He said exports and their destinations needed to be diversified to minimise risks and dependence on just a few markets.

Governments major economic policy for many years has been that every effort should be made to diversify the economy in general, and to diversify exports in particular, he said.

The President said the hubs, agriculture, education, diamonds, innovation, health and transport are expected to contribute to the diversification process.

Government will continue to facilitate the diversification of the economy which should translate into greater growth of the private sector, he said, adding that they rely on everyone to seize the opportunities to ensure the future strength of the economy and prosperity for everyone. BOPA