IMF Executive Board Concludes 2021 Article IV Consultation with Botswana
IMF News, June 2, 2021
Source details
- Canonical URL
- IMF Executive Board Concludes 2021 Article IV Consultation with Botswana
Other formats
Bibliographic details
- Published: June 2, 2021
COVID-19 impact and policy response
- Real GDP contracted by 7.9 percent in 2020.
- Unemployment rate reached 24.5 percent in the last quarter of 2020—the highest in the last three and half decades.
- Botswana entered the COVID-19 crisis with larger buffers than most countries but faced structural challenges from heavy reliance on diamonds and contact-intensive services.
- Authorities implemented a fiscal relief package focused on supporting firms and vulnerable households.
- Monetary stance was eased to maintain adequate liquidity in the banking system.
2021 outlook and inflation
- Real GDP projected to grow 8.3 percent in 2021, driven by:
- improvements in global demand for diamonds,
- easing of mobility restrictions,
- an expansionary fiscal stance.
- Recovery expected to be uneven across sectors depending on domestic and external environment.
- Current account and fiscal deficits projected to narrow in 2021 due to:
- expected improvement in global diamond demand,
- phasing out of one-off COVID-related spending,
- implementation of revenue-enhancing and expenditure consolidation measures.
- Inflationary pressures expected to rise temporarily near term because of:
- rebound in oil prices,
- increase in fuel levy and VAT rate,
- increase in administered prices.
- Inflation expected to remain within central objective of 3–6 percent over the medium term.
- Growth outlook subject to high uncertainty; downside risks include:
- evolution of the pandemic,
- availability and deployment of vaccines,
- lower-than-expected diamond revenue.
- Upside scenarios include faster vaccine rollout and steadfast implementation of supply-side reforms to diversify growth.
Executive Board assessment and policy recommendations
- Directors commended Botswana for entering the crisis with larger fiscal space and for decisive pandemic response.
- Emphasized need for successful vaccine rollout to support recovery.
- Underscored steadfast commitment to structural reforms to increase diversification, tackle climate change challenges, and boost potential growth.
- Fiscal policy:
- Supported maintaining targeted support to firms and households until recovery is firmer.
- Welcomed planned fiscal consolidation through revenue and expenditure measures to rebuild buffers and create fiscal space for growth-oriented investment.
- Sustaining consolidation will require civil service reform, rationalizing parastatals and improving their governance, and strengthening the fiscal framework.
- Monetary and exchange rate policy:
- Supported maintaining an accommodative monetary policy stance.
- Highlighted need to monitor second-round effects from supply shocks and discretionary measures on inflation and expectations, and to monitor credit developments.
- Encouraged use of exchange rate flexibility within the existing crawl arrangement to help adjust to shocks and facilitate structural transformation.
- Financial sector:
- Directors agreed the financial sector is sound.
- Encouraged monitoring risks through enhanced reporting, regular stress-testing and financial oversight.
- Advised maintaining targeted support to solvent but illiquid firms while reducing moral hazard and unwinding COVID-related forbearance measures as the health crisis wanes.
- Encouraged clarifying role of development banks and deepening the domestic bond market.
- Urged addressing remaining deficiencies in the AML/CFT framework to be removed from the FATF grey list.
- Structural transformation:
- Emphasized successful implementation of the Economic Recovery and Transformation Plan (ERTP) to accelerate structural transformation, create jobs, and promote inclusiveness.
- Commended focus on promoting non-mineral export, manufacturing, and transformative sectors including digitalization and green and climate adaptation technologies.
Key statistics from "Botswana: Selected Economic Indicators, 2015–26" (as reported)
- Real GDP (annual percent change): 2015 -1.7; 2016 4.3; 2017 2.9; 2018 4.5; 2019 3.0; 2020 -7.9; 2021 8.3; 2022 6.4; 2023 4.8; 2024 4.0.
- Mineral GDP (annual percent change, selected): 2015 -19.6; 2016 -3.5; 2017 -11.1; 2018 7.6; 2019 -4.1; 2020 -26.2; 2021 52.9; 2022 17.2; 2023 8.0; 2024 1.7; 2025 1.3.
- Nonmineral GDP (annual percent change, selected): 2015 5.5; 2016 4.1; 2017 3.9; 2018 -5.9; 2019 5.0; 2020 4.4.
- GDP per capita (US dollars): 2015 6,811; 2016 7,249; 2017 7,883; 2018 8,290; 2019 7,989.
- Consumer prices (average): 2015 3.1; 2016 2.8; 2017 3.3; 2018 3.2; 2019 2.7; 2020 1.9.
- Diamond production (millions of carats): 2015 20.8; 2016 20.9; 2017 22.9; 2018 24.4; 2019 23.7; 2020 16.9; 2021 23.5; 2022 25.9; 2023 28.0; 2024 27.8; 2025 28.3.
- Monetary base (annual percent change): 2015 18.6; 2016 3.7; 2017 -13.7; 2018 17.5; 2019 5.4; 2020 -7.0; 2021 10.4; 2022 10.3; 2023 8.9; 2024 8.8.
- Broad money (M2) (annual percent change): 2015 19.9; 2016 5.9.
- Credit to the private sector (annual percent change, selected): 2015 9.0; 2016 5.3; 2017 6.6; 2018 7.1; 2019 7.8; 2020 10.5; 2021 9.2; 2022 9.3.
- Gross investment (percent of GDP): 2015 32.6; 2016 27.0; 2017 27.6; 2018 29.4; 2019 33.3; 2020 35.8; 2021 34.7; 2022 32.4; 2023 31.8; 2024 31.1; 2025 31.2.
- Public investment (percent of GDP, selected): 2015 8.5; 2016 8.2; 2017 6.2; 2018 5.1; 2019 4.9; 2020 4.9.
- Private investment (percent of GDP, selected): 2015 23.8; 2016 18.5; 2017 19.4; 2018 21.4; 2019 26.1; 2020 29.6; 2021 28.5; 2022 26.5; 2023 26.3; 2024 25.8; 2025 26.2.
- Gross savings (percent of GDP, selected): 2015 39.5; 2016 123.1; 2017 104.8; 2018 108.4; 2019 27.2; 2020 25.7; 2021 31.4; 2022 30.5; 2023 32.8; 2024 33.6; 2025 33.8.
- Central government finances (percent of GDP, year beginning April 1): Total revenue and grants: 2015 33.2; 2016 30.9; 2017 26.0; 2018 24.0; 2019 27.5; 2020 27.3; 2021 27.1; 2022 26.7.
- Total expenditure and net lending (percent of GDP, selected): 2015 32.5; 2016 32.0; 2017 33.9; 2018 35.0; 2019 30.2; 2020 29.2; 2021 26.6.
- Overall balance (deficit – percent of GDP, selected): 2015 -4.6; 2016 0.6; 2017 -1.1; 2018 -11.0; 2019 -4.4; 2020 -5.7; 2021 -1.9; 2022 -0.8; 2023 -0.5; 2024 0.1.
- Non-mineral primary balance (percent of non-mineral GDP): 2015 -18.1; 2016 -17.6; 2017 -14.3; 2018 -17.1; 2019 -17.7; 2020 -18.5; 2021 -16.5; 2022 -18.3; 2023 -13.4; 2024 -12.3; 2025 -11.2; 2026 -10.3.
- Total central government debt (percent of GDP, selected): 2015 23.2; 2016 21.3; 2017 18.1; 2018 19.2; 2019 28.9.
- Exports of goods and services, f.o.b. (% change, selected): 2015 -24.1; 2016 14.4; 2017 -16.2; 2018 -17.5; 2019 -24.6; 2020 58.9.
- o/w diamonds (percent change, selected): 2015 -28.4; 2016 24.6; 2017 -17.0; 2018 9.8; 2019 -19.9; 2020 -21.8; 2021 64.2; 2022 7.4; 2023 7.5; 2024 6.5.
- Imports of goods and services, f.o.b. (% change, selected): 2015 -10.0; 2016 -14.6; 2017 -9.8; 2018 17.0; 2019 5.2; 2020 -4.9; 2021 11.7; 2022 -3.0; 2023 5.8; 2024 4.6.
- Current account balance (percent of GDP, selected): 2015 2.1; 2016 7.7; 2017 -6.0; 2018 -10.1; 2019 -3.3; 2020 1.0; 2021 2.5.
- Overall Balance (percent of GDP, selected): 2015 -5.4; 2016 -2.3; 2017 1.8; 2018 2.3; 2019 -8.4; 2020 -14.4; 2021 -0.7; 2022 3.4.
- Nominal effective exchange rate (2010=100): 2015 94.9; 2016 95.1; 2017 95.4; 2018 95.5; 2019 (not listed); 2020 (not listed).
- Real effective exchange rate (2010=100): 2015 105.2; 2016 105.0; 2017 105.1.
- Terms of trade (2005=100, selected): 2015 197.4; 2016 175.9; 2017 159.2; 2018 166.2; 2019 143.6; 2020 138.7; 2021 151.6; 2022 159.0; 2023 165.4; 2024 170.0; 2025 170.6; 2026 171.4.
- External public debt (percent of GDP, selected): 2015 14.3; 2016 11.1; 2017 12.4; 2018 13.0; 2019 9.9; 2020 8.7.
- o/w public and publicly guaranteed (percent of GDP, selected): 2015 4.7; 2016 4.2; 2017 3.8; 2018 2.6; 2019 2.4.
- Gross official reserves (end of period, Millions of U.S. dollars): 2015 7,546; 2016 7,189; 2017 7,502; 2018 6,657; 2019 6,172; 2020 4,944; 2021 4,818; 2022 5,178; 2023 5,914; 2024 6,724; 2025 7,504; 2026 8,345.
- Months of imports of goods and services (selected): 2015 13.1; 2016 13.8; 2017 12.3; 2018 10.1; 2019 7.3; 2020 (not listed).
- Months of non-diamond imports (selected): 2016 17.8; 2017 16.3; 2018 13.7; 2019 13.9; 2020 9.6; 2021 10.7; 2022 12.2; 2023 12.9.
- Percent of GDP (selected line): 2015 58.0; 2016 44.9; 2017 41.1; 2018 37.5; 2019 29.5; 2020 25.6; 2021 28.8; 2022 30.1.
IMF Press Release No. 21/155 — June 2, 2021.
