IMF Staff Country Reports

Botswana: Selected Issues

September 10, 2024

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Format: Chicago

International Monetary Fund. African Dept. "Botswana: Selected Issues", IMF Staff Country Reports 2024, 287 (2024), accessed October 8, 2024, https://doi.org/10.5089/9798400288258.002

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Summary

This Selected Issues paper discusses the rationale for and design of a new Sovereign Wealth Fund (SWF) in Botswana. It reviews the causes of declining financial reserves and calculates fiscal targets that would be needed to achieve insurance and intergenerational equity objectives. While debt ratios have been steady, the government has financed these deficits by drawing down its assets. Intergenerational equity may be better served by creating financial assets, rather than through investment spending, although the two are not mutually exclusive. Botswana has tended to allocate resource revenues primarily to physical and human investment. Before discussing SWF design, it is important to consider the level of savings that the government requires to achieve its policy objectives. There are many reasons why a government may want to generate savings and manage them in a SWF. IMF concludes that a SWF could provide a useful institutional framework to support rebuilding buffers, but achieving significant savings to meaningfully fund an SWF would require much tighter fiscal policy than has been observed in recent years.

Subject: Budget planning and preparation, Expenditure, Fiscal policy, Fiscal rules, Income inequality, National accounts, Public financial management (PFM), Social protection spending

Keywords: Africa, Budget planning and preparation, C. financing social protection, Fiscal rules, Global, Government investment account, Income inequality, Protection system, Pula fund, Research support, Social protection spending, Sub-Saharan Africa

Publication Details

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