IMF Working Papers

The Macroeconomic Impact of HIV/AIDS in Botswana

Author/Editor:

Silvia Sgherri ; Maitland MacFarlan

Publication Date:

June 1, 2001

Electronic Access:

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Summary:

This paper provides an overview of the potential macroeconomic effects of HIV/AIDS in Botswana, focusing on the key channels through which the pandemic is likely to affect the economic outlook and on the uncertainties involved. To estimate the impact of HIV/AIDS, a dual-economy equilibrium model is constructed and simulated under different scenarios. Depending on exactly how AIDS affects the outlook, GDP growth is projected to fall from around 5½ percent a year without the pandemic to between 1½ and 2½ percent a year with AIDS. Non-negligible redistribution effects across sectors and labor skill categories are also likely to arise. Finally, the paper draws attention to the potential effects of HIV/AIDS on the long-term fiscal position of Botswana, highlighting the need for increased international support and/or lower drug prices so that the widespread introduction of anti-retroviral drug treatments is feasible.

Series:

Working Paper No. 2001/080

Subject:

Capital accumulation Expenditure Health Health care spending HIV and AIDS Labor Labor markets National accounts Production Total factor productivity Wages