Botswana: 2022 Article IV Consultation - Press Release; Staff Report; and Statement by the Executive Director for Botswana

IMF Staff Country Reports, July 27, 2022

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Canonical URL: Botswana: 2022 Article IV Consultation - Press Release; Staff Report; and Statement by the Executive Director for Botswana

A successful vaccination campaign, prudent macroeconomic management, and strong demand for diamonds have allowed Botswana to recover to its pre-pandemic output level.
Implementing the planned medium-term fiscal consolidation will rebuild buffers and financial assets for future generations.
The consolidation plan will achieve fiscal surplus over the medium term and rebuild the Government Investment Account to shield the economy against shocks and build an asset base.
Bringing inflation back within the Bank of Botswana’s objective range will require additional monetary tightening.
In the absence of further tightening, the broad-based rise in inflation risks de-anchoring inflation expectations and requiring even sharper tightening later with negative effects on growth.
Successful implementation of the Reset Agenda will enhance Botswana’s resilience and ensure sustained high-job rich growth.
Implementation of the Reset Agenda will diversify the economy toward financial services (facilitated by fintech), manufacturing, and tourism, and transform Botswana into a high-income status as per Vision 2036.

Planned medium-term fiscal consolidation is central to rebuilding buffers and financial assets for future generations.
The consolidation plan targets a fiscal surplus over the medium term.
Rebuilding the Government Investment Account is a specific objective to shield the economy against shocks and build an asset base.

Additional monetary tightening is required to bring inflation back within the Bank of Botswana’s objective range.
Failure to tighten further risks de-anchoring inflation expectations and could necessitate sharper tightening later with negative effects on growth.

The Reset Agenda aims to enhance resilience and secure sustained high-job rich growth.
Structural transformation priorities include:
- Diversification toward financial services (facilitated by fintech), manufacturing, and tourism.
- Enhancing accountability, competition, and governance.
- Deepening trade integration.
- Accelerating the energy transition.

Subjects: Expenditure, Fiscal policy, International organization, Monetary policy, Prices.
Keywords: Botswana authorities, Botswana's economy, Fiscal consolidation, Fiscal stance, Global, government ministry, import bill, Inflation, monetary policy transmission, Sub-Saharan Africa.

IMF Staff Country Report No. 2022/247; July 27, 2022.