1 percent in the twelve months to september 2018, compared to lower growth of 2. 4 percent in the year to september 2017. this expansion was mainly driven by sustained improvement in nonmining gdp growth and the recovery in mining output. inflation was low and stable, and fluctuated around the lower end of the objective range of 3 - 6 percent for most of 2018 ; and the outcome was broadly consistent with projections for the year. the low rate of annual price increase was mostly due to the decrease in food inflation. food price inflation decreased from 1. 1 percent in 2017 to a negative 0. 2 percent in 2018. however, fuel prices increased significantly by 16. 1 percent during 2018, due to upward adjustments in may, october and november. this compares to a relatively smaller increase of 9. 5 percent in 2017. overall, the increase in administered prices ( including fuel prices, public transport fares, as well as electricity tariffs ) added 1. 86 percentage points to inflation in 2018. distinguished ladies and gentlemen, the overall modest increase in prices in botswana was in the context of subdued domestic demand pressures, as a result of the restrained growth in personal incomes and largely stable foreign inflation. monetary policy was, therefore, conducted against the background of below - trend economic activity and a positive medium - term outlook for inflation and moderate fiscal expansion. government expenditure grew by 6. 6 percent in 2018 compared to a contraction of 6. 3 percent in the prior year. it should be recognised, in this respect, that beyond the increase in wages, the short - term impact of government spending on domestic demand is moderated to the extent that a significant component involves infrastructure and capacity development. in the context of botswana, this type of spending tends to be import intensive and the economic benefits of such public investments are derived in the medium to long term. regarding wage developments, it is notable that government recurrent expenditure included a 3 percent salary increase with effect from april 1, 2018. however, nominal national wages increased by 2. 3 percent, on average, which was below the average inflation rate for the period. these developments suggest a modest impact on domestic demand and inflation. on credit developments, growth in commercial bank credit accelerated from 5. 6 percent in 2017 to 7. 7 percent in 2018 and included a faster increase in lending to businesses, from 3. 2 percent in 2017 to 10 percent in 2018. for households, annual credit expansion fell from 7. 2 percent in 2017 to 6. 2 percent in 2018, in the

stability to prices through our monetary policies and in keeping our banking sector sound, stable and liquid. all these give us cause to be optimistic about sustaining inclusive growth in 2016 and beyond,... particularly if adherence to good governance becomes the norm from the national agencies as well as to the local government units. members of the lmp, good governance is also the rationale that underpins the requirement by government to get prior opinion of the bsp ’ s monetary board ( mb ) on all government loans, including those from lgus to ensure that borrowings are consistent with overall state financial goals. this requirement is essentially based on the 1987 constitution ( article 12 ) that mandates the bsp to provide policy direction in the areas of money, banking and credit. furthermore, republic act no. 7653 or the bsp charter ( section 123 ) provides that the bsp functions as financial advisor on official credit operations of the government, its political subdivisions and instrumentalities. bis central bankers ’ speeches the objective is to enable the bsp to monitor public sector borrowings and to assess their impact on monetary aggregates, the price level and the balance of payments in fulfillment of its role and mandate to promote and maintain monetary and financial stability. as you may know, requests for mb opinion on planned borrowings may be submitted directly to the bsp by the lgus or through the lending banks. the bsp recognizes the importance of credit to lgus, particularly municipalities. thus, the bsp has issued circulars to streamline the documentary requirements and facilitate the review process on how lgus can secure mb opinions on lgu loans. we have since registered a significant increase in lgu ’ s engagement with the bsp. in 2015, the bsp received a total of 347 requests for mb opinion, an increase of 35 percent from the 257 requests in 2014. the cooperation of the lgus and lending banks enabled the bsp to render mb opinion on 334 or 96 percent of these requests. about 76 percent of the requests we received in 2015 came from municipalities, involving a total of p12. 2 billion. it is notable that the majority of the loans for which bsp rendered an opinion in 2015 were used for infrastructure projects such as farm - to - market roads, public markets and multi - purpose halls. these purposeful spending by local governments provide a boost not only to community development but also to broader national growth. indeed, in the context of governance, local government units play a significant role in ensuring