Statement at the Conclusion of an IMF Mission to Botswana

The IMF mission visited Botswana from 18th to 31st May to conduct the 2011 Article IV Consultation discussions. The mission's work focused on reviewing recent economic developments and prospects and policies to ensure continued macroeconomic stability and growth. Click here to access the press release by the IMF following this mission. 

National (Botswana) accounts return to surplus

This article (Mmegi newspaper) indicates that Botswana's balance of payments, or Botswana's net financial position with the rest of the world, has been in deficit since 2008, with trade imports outweighing exports and net international investment earnings waning due to the recession. However Bank of Botswana  reports that Botswana's balance of payments returned to surplus in the first quarter of 2011. Click here to read the full article.

Diamonds Are Not Forever: Botswana Medium-term Fiscal Sustainability

This World Bank  Policy Research Working Paper (by Naoko C. Kojo) analyzes Botswana’s medium-term fiscal sustainability in view of the expected depletion of diamonds in the future. The paper shows that in the absence of policy adjustments, Botswana’s current fiscal policy strategy is unsustainable over the longer term, which could endanger macroeconomic stability and Botswana’s reputation as Africa’s success story. The paper further contends that ensuring medium-term sustainability of Botswana’s public finances requires stronger revenue collection, through improved revenue administration, greater tax enforcement, and the rationalization of tax exemptions in order to realize the full revenue potential. 

At the same time, the government needs to maximize the effectiveness of public expenditure and bring down public spending to levels that are more in line with long-term revenue prospects. The paper emphasises that a greater control over the public sector wage bill is critically important. It is further argued that growth of a dynamic non-mining sector is crucial for Botswana not only from the fiscal sustainability point of view, but from the point of view of achieving balanced development that will create jobs and deliver durable reduction in poverty and inequality. Fiscal policy will have to play a central role in this process. Click here to access the full paper.