Botswana: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
IMF Staff Country Reports, March 27, 2020
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- Botswana: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
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Bibliographic details
- Published: March 27, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513537375.002
Near- and medium-term growth outlook
- Gross domestic product growth is forecasted to pick up to 4.4 percent in 2020 and 5.6 percent in 2021 as the diamond industry recovers somewhat, and a new copper mine comes on stream.
- Growth will ease back to around 4 percent over the medium term.
- Risks to the outlook include:
- faster-than-anticipated slowdown in key trading partners,
- shifts in consumer preferences to synthetic diamonds,
- climate shocks.
Fiscal stance and consolidation
- The size and pace of the planned adjustment are consistent with Botswana’s fiscal space.
- The composition of the adjustment should protect efficient capital and social spending.
- Given that buffers are being eroded, it is critical that consolidation starts as envisaged in FY2020.
- Starting consolidation as envisaged would help start addressing external imbalances and contribute to a gradual rebuilding of buffers over the medium term.
External sector and resilience
- Addressing external imbalances is a priority linked to fiscal consolidation and buffer rebuilding.
- Building resilience to shocks is emphasized given exposure to commodity cycles and climate risks.
Financial sector and monetary transmission reforms
- To strengthen the monetary transmission mechanism and deepen the domestic financial market there is a need to:
- develop the secondary market for government securities,
- leverage Fintech,
- facilitate the attachment of collateral,
- improve credit information.
Key policy recommendations (summary)
- Begin fiscal consolidation in FY2020 to rebuild buffers and address external imbalances.
- Ensure consolidation protects efficient capital and social spending to preserve growth-enhancing and equity-promoting expenditures.
- Implement financial market reforms to deepen markets and improve monetary transmission, including secondary market development, Fintech adoption, collateral facilitation, and credit information enhancement.
Source: Botswana: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
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