of financial services in botswana becomes critically important. distinguished guests, banks are, by definition, risk traders and, invariably, should be compensated for taking such risks. however, in the context of economies, such as botswana, there is a tendency for some large banking groups to engage in some form of “ cherrypicking ” of best corporates and wealthy customers for credit support to the exclusion of smmes, non - salaried persons, low income groups and other underserved segments of society. in order to continue to contribute positively to sustainable economic development, the botswana banking system should be more inclusive. banks ought to invest more in risk management infrastructure ( staff and systems ) to be able to tap into new resources and opportunities, including identifying and funding bankable projects originating from low - income groups and small enterprises, and, i must add, in a safe and prudent manner. in the long - term, failure to do so could marginalise banks, as we know them today, as fintechs and block chain technologies increasingly satisfy the demand for financial services in more innovative and cost - effective ways. according to the world economic forum global competiveness report of 2016 / 17, the botswana financial sector ’ s overall ranking is 66 out of 138 countries, representing a slight deterioration from a ranking of 63 in 2015 / 16. according to the report, “ this is largely due to weak performance in the soundness of banks, ( ranked 68 ), and ease of access to loans, ( ranked 69 ) ” ; these aspects were ranked and 56, respectively, in the 2015 / 16 global competitiveness index ”. it is also a matter of public policy concern that the ratio of private sector credit to gdp has increased only marginally, from 25 percent in 2011 to 31. 8 percent in 2016. furthermore, the proportion of mortgage loans to total gdp has been, on average 5. 2 percent in the last five years. this compares, for example, with a ratio of 69. 3 percent for norway, 67. 6 percent for the united kingdom and 84. 3 percent for sweden. overall, therefore, these particular financial indicators for botswana are below international norms and suggest that it may be true that lack of cost - effective access to appropriate finance and credit is a constraining factor towards a more diversified economy. distinguished guests, post the global financial crisis, the financial stability board and other international standards - setting bodies have been spearheading regulatory reforms aimed at enhancing the resili

##ntly managed banks, and effective regulation and supervision. therefore, the financial sector continues to be well - placed and resourced to support economic activity in the recovery phase of the economy. global economic prospects in 2022 honourable minister, distinguished ladies and gentlemen, now looking ahead, that is, prospective economic developments in 2022. global economic growth is expected to moderate to 4. 4 percent in 2022, from 5. 9 percent in 2021. however, growth prospects are uneven across regions and reflect uncertain covid - 19 profile and response measures ( restrictions and vaccine rollouts ), speed and scale of monetary policy tightening and withdrawal of policy stimulus, as well as geopolitical tensions. regarding price developments, global inflation is expected to remain elevated in 2022, influenced by prolonged supply chain disruptions, anticipated increase in energy prices and improved global demand conditions as most countries progressively deploy effective covid - 19 vaccines and economies reopen. in this environment, it is anticipated that monetary policy will likely tighten in most economies to control inflationary pressures resulting from pandemic - induced and persistent supply and demand mismatches. domestic economic prospects in 2022 honourable minister, distinguished ladies and gentlemen, the domestic economy is forecast to grow by 4. 3 percent in 2022, driven mainly by the continuing recovery of mining activity and improvement in global output. the positive growth prospects are also premised on conducive financing conditions associated with accommodative monetary policy and sound financial environment. in addition, the effective implementation of the ertp, underpin impetus for positive economic prospects. honourable minister, regarding inflation, the immediate backdrop is that inflation is worryingly high, having risen progressively since the second quarter of 2021, culminating in a reading of 10. 6 percent for january 2022. at this level, there is a risk of self - fulfilling expectations of sustained high inflation as manifested in inflation - indexed contract price adjustments, agitation for higher transport fares, negotiations for wage and salary increases, a rise in house rentals and general price increases for goods and services. to mitigate against this, let me state that inflation is forecast to start moderating from the second quarter of 2022 and, subject to current projections remaining valid, revert to within the bank ’ s 3 – 6 percent medium - term objective range from the third quarter of 2022. to be absolutely clear, this projected trajectory for inflation is premised on the following. first, the 2 percentage points increase in vat was a once -