IMF Staff Completes 2025 Article IV Mission to Botswana

IMF News, September 26, 2025

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An IMF team, led by Mr. Édouard Martin, Mission Chief for Botswana, visited Gaborone and held discussions on the 2025 Article IV consultation from September 15–26, 2025.
End-of-Mission press releases convey preliminary findings; staff will prepare a report for the IMF's Executive Board subject to management approval.

Real activity:
- Growth of 3.2 percent in 2023.
- Contraction of 3 percent in 2024.
- Mining output declined by 24 percent in 2024.
- Non-mineral activity slowed to 2.8 percent in 2024.
External position:
- Current account balance moved from a surplus of 1.5 percent of GDP in 2023 to a deficit of 4.2 percent of GDP in 2024.
- International reserves declined to about 5 months of imports cover.
Outlook:
- Botswana’s economic activity is expected to contract by about 1 percent in 2025, owing primarily to a further decline in diamond production, before starting to recover in 2026.
- Over the medium term, with ambitious reforms, growth could recover gradually to more than 4 percent.

Inflation:
- Inflation has remained below the lower bound of Bank of Botswana’s objective range of 3–6 percent.
- It is expected to get back within this range over the next few months as the recent depreciation of the Pula partly passes through to consumer prices.
Policy rate:
- Bank of Botswana has kept its policy rate unchanged at 1.9 percent since August 2024.
Exchange rate adjustments:
- Effective July 11th, authorities increased the Pula rate of deprecation against its currency basket while widening the trading margin.
- The Pula has since depreciated by 6.0 percent against the U.S. dollar and 8.6 percent against the South African rand.
Rationale:
- Measures were taken to safeguard competitiveness of domestic industries, promote diversification, and preserve official foreign exchange reserves.

Fiscal balance:
- Preliminary estimates indicate the fiscal deficit increased further in fiscal year 2024/25, to 7.1 percent of GDP.
- Drivers: decline in mineral revenues and increase in current spending, only partly offset by lower capital spending.
Public debt:
- Public debt has increased to more than 30 percent of GDP.
Government action:
- Authorities have initiated efforts to streamline government spending.

Condition:
- Banking sector remains well capitalized and profitable, but liquidity has tightened.
Recommended actions:
- Accelerate implementation of the remaining 2023 Financial Sector Assessment Program recommendations to reduce financial sector risks and reinforce stability.
- Key recommendations aim at enhancing financial sector resilience, improving monetary policy transmission, and operationalizing new regulations and laws.

Short- and medium-term priorities recommended by IMF staff:
- Enhance domestic revenue mobilization.
- Streamline the wage bill.
- Better target social assistance programs.
- Strengthen the management of state-owned enterprises.
- Create a more conducive business environment, with emphasis on reducing red tape and promoting financial deepening.
Growth and diversification:
- Accelerating growth and job creation requires greater private sector participation, a more diversified export base, and a more efficient public sector.
- Government initiatives to reduce wasteful public spending, better prioritize public investment, and promote private sector-led investment, including as part of Botswana Economic Transformation Program, are welcome.
- The government is encouraged to include the recommended reforms into its new five-year National Development Plan.

Press Release No. 25/317 — IMF Staff Completes 2025 Article IV Mission to Botswana, September 26, 2025.