the 2016 and 2017 ones ; intended to complement and further enrich the policy analysis and prospects for success of the national industrialisation strategy. this is through highlighting areas for improvement, especially relating to funding and related institutional governance and operational effectiveness necessary for beneficial mobilisation and harnessing of financial resources using, where relevant, cross - country examples, such as brazil, singapore and the republic of korea. you may recall that, last year i alluded to disharmony or misaligned nexus between a stable macroeconomic environment and weak economic outcomes ; specifically insufficient growth rates, high unemployment levels and income inequality, and the resulting slow pace towards attainment of the high - income status. let me bring to your attention a recent study by the international monetary fund on “ growth in southern africa : issues and reform options ” ; it is not contained in the annual report ; but pertinent for public discourse on the “ middle - income ” trap. the study identified three factors that continue to detract from growth prospects and transition to high - income status. first, the lacklustre relative export performance and shrinking tradeable sector. in contrast to countries that attained middle - income status rapidly ( in latin america and south - east asia, for example ), for botswana, over the last few years, the private tradeable sector declined as a share of the country ’ s gdp. the second factor relates to the low and declining total factor productivity encompassing land, capital and labour. the third one is the relatively large public sector, including state - owned enterprises, with the resulting sub - optimal delivery of services and utilities, compared to middle - income peers. in their respective country assessments, the rating agencies, moody ’ s and s & p global ratings, also emphasise this last point, namely, the need for a dynamic and expanded role of the private sector in the economy, to achieve economic diversification and inclusive growth. the combination of these factors contributes to declining competitiveness in the country, in terms of access to infrastructure and utilities, skills and, ultimately, tradeable goods and services. distinguished ladies and gentlemen of the media, while the analysis is obviously relative and involves country rankings, the bank suggests that the study provides relevant issues for consideration of policy responses. notably, this is in the areas relating to the balance between inward versus outward - looking industrialisation options, land economy and management, governance and accountability frameworks of institutions, domestic resources mobilisation and allocative efficiency, capital markets development and

nevertheless, it is not too early to prepare such “ exit strategies ” and to explain how they would work. the challenge facing the monetary policy committee is straightforward in principle but difficult in practice. as activity returns to more normal levels, the outlook for inflation will pick up. and it is the outlook for inflation that will guide decisions on the pace and timing of a withdrawal of monetary stimulus. reaching judgements on the outlook for inflation is never easy, and assessing their implications for policy will always be a matter of balancing risks. in contrast, the choice of instruments is simple. when appropriate the mpc will raise bank rate and gradually run down its portfolio of assets in a manner consistent with maintaining orderly markets. just as no one should plan on the present degree of monetary stimulus persisting indefinitely, so too no bank should expect that the current extraordinary liquidity support will continue for ever. in due course, a strategy will be needed to exit from that temporary support, and from the extensive bank guarantees, to the permanent regime for liquidity insurance that the bank announced last year. the bank of england will talk with the banks about how to manage the transition. as we emerge from recession, fiscal policy too will have to change. in taking the extraordinary measures to stabilise banks and the wider economy, some of the past build - up of debt has been transferred from the private to the public sector. and it was right to use a temporary fiscal stimulus to counter the depth of the downturn experienced last year. but five years from now national debt, as a proportion of national income, is expected to be more than double its level before the crisis. so it is also necessary to produce a clear plan to show how prospective deficits will be reduced during the next parliament, so returning to a gradually declining path for the ratio of national debt to national income. we must learn lessons from the events of the past two years. they cannot be final conclusions because the present crisis has some way to run. but two stand out. first, price stability does not guarantee stability of the economy as a whole. second, the instruments used to pursue financial stability are in need of sharpening and refining. setting bank rate to maintain price stability was successful in itself, but did not prevent a recession induced by a financial crisis. but let ’ s not throw out the baby with the bathwater. the period prior to the crisis was the most stable economic environment for generations. and, unlike most previous recessions, this crisis wasn ’