{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with Botswana",
  "publication": "IMF News, June 2, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/06/02/pr21155-botswana-imf-executive-board-concludes-2021-article-iv-consultation",
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  "overlayPath": "/en/news/articles/2021/06/02/pr21155-botswana-imf-executive-board-concludes-2021-article-iv-consultation/index.md",
  "summary": "Real GDP contracted by 7.9 percent in 2020.",
  "publishDate": "2021-06-02",
  "sections": [
    {
      "heading": "COVID-19 impact and policy response",
      "content": "- Real GDP contracted by 7.9 percent in 2020.\n- Unemployment rate reached 24.5 percent in the last quarter of 2020—the highest in the last three and half decades.\n- Botswana entered the COVID-19 crisis with larger buffers than most countries but faced structural challenges from heavy reliance on diamonds and contact-intensive services.\n- Authorities implemented a fiscal relief package focused on supporting firms and vulnerable households.\n- Monetary stance was eased to maintain adequate liquidity in the banking system."
    },
    {
      "heading": "2021 outlook and inflation",
      "content": "- Real GDP projected to grow 8.3 percent in 2021, driven by:\n  - improvements in global demand for diamonds,\n  - easing of mobility restrictions,\n  - an expansionary fiscal stance.\n- Recovery expected to be uneven across sectors depending on domestic and external environment.\n- Current account and fiscal deficits projected to narrow in 2021 due to:\n  - expected improvement in global diamond demand,\n  - phasing out of one-off COVID-related spending,\n  - implementation of revenue-enhancing and expenditure consolidation measures.\n- Inflationary pressures expected to rise temporarily near term because of:\n  - rebound in oil prices,\n  - increase in fuel levy and VAT rate,\n  - increase in administered prices.\n- Inflation expected to remain within central objective of 3–6 percent over the medium term.\n- Growth outlook subject to high uncertainty; downside risks include:\n  - evolution of the pandemic,\n  - availability and deployment of vaccines,\n  - lower-than-expected diamond revenue.\n- Upside scenarios include faster vaccine rollout and steadfast implementation of supply-side reforms to diversify growth."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors commended Botswana for entering the crisis with larger fiscal space and for decisive pandemic response.\n- Emphasized need for successful vaccine rollout to support recovery.\n- Underscored steadfast commitment to structural reforms to increase diversification, tackle climate change challenges, and boost potential growth.\n- Fiscal policy:\n  - Supported maintaining targeted support to firms and households until recovery is firmer.\n  - Welcomed planned fiscal consolidation through revenue and expenditure measures to rebuild buffers and create fiscal space for growth-oriented investment.\n  - Sustaining consolidation will require civil service reform, rationalizing parastatals and improving their governance, and strengthening the fiscal framework.\n- Monetary and exchange rate policy:\n  - Supported maintaining an accommodative monetary policy stance.\n  - Highlighted need to monitor second-round effects from supply shocks and discretionary measures on inflation and expectations, and to monitor credit developments.\n  - Encouraged use of exchange rate flexibility within the existing crawl arrangement to help adjust to shocks and facilitate structural transformation.\n- Financial sector:\n  - Directors agreed the financial sector is sound.\n  - Encouraged monitoring risks through enhanced reporting, regular stress-testing and financial oversight.\n  - Advised maintaining targeted support to solvent but illiquid firms while reducing moral hazard and unwinding COVID-related forbearance measures as the health crisis wanes.\n  - Encouraged clarifying role of development banks and deepening the domestic bond market.\n  - Urged addressing remaining deficiencies in the AML/CFT framework to be removed from the FATF grey list.\n- Structural transformation:\n  - Emphasized successful implementation of the Economic Recovery and Transformation Plan (ERTP) to accelerate structural transformation, create jobs, and promote inclusiveness.\n  - Commended focus on promoting non-mineral export, manufacturing, and transformative sectors including digitalization and green and climate adaptation technologies."
    },
    {
      "heading": "Key statistics from \"Botswana: Selected Economic Indicators, 2015–26\" (as reported)",
      "content": "- Real GDP (annual percent change): 2015 -1.7; 2016 4.3; 2017 2.9; 2018 4.5; 2019 3.0; 2020 -7.9; 2021 8.3; 2022 6.4; 2023 4.8; 2024 4.0.\n- Mineral GDP (annual percent change, selected): 2015 -19.6; 2016 -3.5; 2017 -11.1; 2018 7.6; 2019 -4.1; 2020 -26.2; 2021 52.9; 2022 17.2; 2023 8.0; 2024 1.7; 2025 1.3.\n- Nonmineral GDP (annual percent change, selected): 2015 5.5; 2016 4.1; 2017 3.9; 2018 -5.9; 2019 5.0; 2020 4.4.\n- GDP per capita (US dollars): 2015 6,811; 2016 7,249; 2017 7,883; 2018 8,290; 2019 7,989.\n- Consumer prices (average): 2015 3.1; 2016 2.8; 2017 3.3; 2018 3.2; 2019 2.7; 2020 1.9.\n- Diamond production (millions of carats): 2015 20.8; 2016 20.9; 2017 22.9; 2018 24.4; 2019 23.7; 2020 16.9; 2021 23.5; 2022 25.9; 2023 28.0; 2024 27.8; 2025 28.3.\n- Monetary base (annual percent change): 2015 18.6; 2016 3.7; 2017 -13.7; 2018 17.5; 2019 5.4; 2020 -7.0; 2021 10.4; 2022 10.3; 2023 8.9; 2024 8.8.\n- Broad money (M2) (annual percent change): 2015 19.9; 2016 5.9.\n- Credit to the private sector (annual percent change, selected): 2015 9.0; 2016 5.3; 2017 6.6; 2018 7.1; 2019 7.8; 2020 10.5; 2021 9.2; 2022 9.3.\n- Gross investment (percent of GDP): 2015 32.6; 2016 27.0; 2017 27.6; 2018 29.4; 2019 33.3; 2020 35.8; 2021 34.7; 2022 32.4; 2023 31.8; 2024 31.1; 2025 31.2.\n- Public investment (percent of GDP, selected): 2015 8.5; 2016 8.2; 2017 6.2; 2018 5.1; 2019 4.9; 2020 4.9.\n- Private investment (percent of GDP, selected): 2015 23.8; 2016 18.5; 2017 19.4; 2018 21.4; 2019 26.1; 2020 29.6; 2021 28.5; 2022 26.5; 2023 26.3; 2024 25.8; 2025 26.2.\n- Gross savings (percent of GDP, selected): 2015 39.5; 2016 123.1; 2017 104.8; 2018 108.4; 2019 27.2; 2020 25.7; 2021 31.4; 2022 30.5; 2023 32.8; 2024 33.6; 2025 33.8.\n- Central government finances (percent of GDP, year beginning April 1): Total revenue and grants: 2015 33.2; 2016 30.9; 2017 26.0; 2018 24.0; 2019 27.5; 2020 27.3; 2021 27.1; 2022 26.7.\n- Total expenditure and net lending (percent of GDP, selected): 2015 32.5; 2016 32.0; 2017 33.9; 2018 35.0; 2019 30.2; 2020 29.2; 2021 26.6.\n- Overall balance (deficit – percent of GDP, selected): 2015 -4.6; 2016 0.6; 2017 -1.1; 2018 -11.0; 2019 -4.4; 2020 -5.7; 2021 -1.9; 2022 -0.8; 2023 -0.5; 2024 0.1.\n- Non-mineral primary balance (percent of non-mineral GDP): 2015 -18.1; 2016 -17.6; 2017 -14.3; 2018 -17.1; 2019 -17.7; 2020 -18.5; 2021 -16.5; 2022 -18.3; 2023 -13.4; 2024 -12.3; 2025 -11.2; 2026 -10.3.\n- Total central government debt (percent of GDP, selected): 2015 23.2; 2016 21.3; 2017 18.1; 2018 19.2; 2019 28.9.\n- Exports of goods and services, f.o.b. (% change, selected): 2015 -24.1; 2016 14.4; 2017 -16.2; 2018 -17.5; 2019 -24.6; 2020 58.9.\n- o/w diamonds (percent change, selected): 2015 -28.4; 2016 24.6; 2017 -17.0; 2018 9.8; 2019 -19.9; 2020 -21.8; 2021 64.2; 2022 7.4; 2023 7.5; 2024 6.5.\n- Imports of goods and services, f.o.b. (% change, selected): 2015 -10.0; 2016 -14.6; 2017 -9.8; 2018 17.0; 2019 5.2; 2020 -4.9; 2021 11.7; 2022 -3.0; 2023 5.8; 2024 4.6.\n- Current account balance (percent of GDP, selected): 2015 2.1; 2016 7.7; 2017 -6.0; 2018 -10.1; 2019 -3.3; 2020 1.0; 2021 2.5.\n- Overall Balance (percent of GDP, selected): 2015 -5.4; 2016 -2.3; 2017 1.8; 2018 2.3; 2019 -8.4; 2020 -14.4; 2021 -0.7; 2022 3.4.\n- Nominal effective exchange rate (2010=100): 2015 94.9; 2016 95.1; 2017 95.4; 2018 95.5; 2019 (not listed); 2020 (not listed).\n- Real effective exchange rate (2010=100): 2015 105.2; 2016 105.0; 2017 105.1.\n- Terms of trade (2005=100, selected): 2015 197.4; 2016 175.9; 2017 159.2; 2018 166.2; 2019 143.6; 2020 138.7; 2021 151.6; 2022 159.0; 2023 165.4; 2024 170.0; 2025 170.6; 2026 171.4.\n- External public debt (percent of GDP, selected): 2015 14.3; 2016 11.1; 2017 12.4; 2018 13.0; 2019 9.9; 2020 8.7.\n- o/w public and publicly guaranteed (percent of GDP, selected): 2015 4.7; 2016 4.2; 2017 3.8; 2018 2.6; 2019 2.4.\n- Gross official reserves (end of period, Millions of U.S. dollars): 2015 7,546; 2016 7,189; 2017 7,502; 2018 6,657; 2019 6,172; 2020 4,944; 2021 4,818; 2022 5,178; 2023 5,914; 2024 6,724; 2025 7,504; 2026 8,345.\n- Months of imports of goods and services (selected): 2015 13.1; 2016 13.8; 2017 12.3; 2018 10.1; 2019 7.3; 2020 (not listed).\n- Months of non-diamond imports (selected): 2016 17.8; 2017 16.3; 2018 13.7; 2019 13.9; 2020 9.6; 2021 10.7; 2022 12.2; 2023 12.9.\n- Percent of GDP (selected line): 2015 58.0; 2016 44.9; 2017 41.1; 2018 37.5; 2019 29.5; 2020 25.6; 2021 28.8; 2022 30.1.\n\nIMF Press Release No. 21/155 — June 2, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Botswana and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/06/02/pr21155-botswana-imf-executive-board-concludes-2021-article-iv-consultation"
    }
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    "[Structured JSON version](/en/news/articles/2021/06/02/pr21155-botswana-imf-executive-board-concludes-2021-article-iv-consultation/index.json)",
    "[Bundle manifest](/en/news/articles/2021/06/02/pr21155-botswana-imf-executive-board-concludes-2021-article-iv-consultation/bundle-manifest.json)",
    "Published: June 2, 2021",
    "Real GDP contracted by 7.9 percent in 2020.",
    "Unemployment rate reached 24.5 percent in the last quarter of 2020—the highest in the last three and half decades.",
    "Botswana entered the COVID-19 crisis with larger buffers than most countries but faced structural challenges from heavy reliance on diamonds and contact-intensive services.",
    "Authorities implemented a fiscal relief package focused on supporting firms and vulnerable households.",
    "Monetary stance was eased to maintain adequate liquidity in the banking system.",
    "Real GDP projected to grow 8.3 percent in 2021, driven by:",
    "Recovery expected to be uneven across sectors depending on domestic and external environment.",
    "Current account and fiscal deficits projected to narrow in 2021 due to:",
    "Inflationary pressures expected to rise temporarily near term because of:",
    "Inflation expected to remain within central objective of 3–6 percent over the medium term.",
    "Growth outlook subject to high uncertainty; downside risks include:",
    "Upside scenarios include faster vaccine rollout and steadfast implementation of supply-side reforms to diversify growth.",
    "Directors commended Botswana for entering the crisis with larger fiscal space and for decisive pandemic response.",
    "Emphasized need for successful vaccine rollout to support recovery.",
    "Underscored steadfast commitment to structural reforms to increase diversification, tackle climate change challenges, and boost potential growth.",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Financial sector:",
    "Structural transformation:",
    "Real GDP (annual percent change): 2015 -1.7; 2016 4.3; 2017 2.9; 2018 4.5; 2019 3.0; 2020 -7.9; 2021 8.3; 2022 6.4; 2023 4.8; 2024 4.0.",
    "Mineral GDP (annual percent change, selected): 2015 -19.6; 2016 -3.5; 2017 -11.1; 2018 7.6; 2019 -4.1; 2020 -26.2; 2021 52.9; 2022 17.2; 2023 8.0; 2024 1.7; 2025 1.3.",
    "Nonmineral GDP (annual percent change, selected): 2015 5.5; 2016 4.1; 2017 3.9; 2018 -5.9; 2019 5.0; 2020 4.4.",
    "GDP per capita (US dollars): 2015 6,811; 2016 7,249; 2017 7,883; 2018 8,290; 2019 7,989.",
    "Consumer prices (average): 2015 3.1; 2016 2.8; 2017 3.3; 2018 3.2; 2019 2.7; 2020 1.9.",
    "Diamond production (millions of carats): 2015 20.8; 2016 20.9; 2017 22.9; 2018 24.4; 2019 23.7; 2020 16.9; 2021 23.5; 2022 25.9; 2023 28.0; 2024 27.8; 2025 28.3.",
    "Monetary base (annual percent change): 2015 18.6; 2016 3.7; 2017 -13.7; 2018 17.5; 2019 5.4; 2020 -7.0; 2021 10.4; 2022 10.3; 2023 8.9; 2024 8.8.",
    "Broad money (M2) (annual percent change): 2015 19.9; 2016 5.9.",
    "Credit to the private sector (annual percent change, selected): 2015 9.0; 2016 5.3; 2017 6.6; 2018 7.1; 2019 7.8; 2020 10.5; 2021 9.2; 2022 9.3.",
    "Gross investment (percent of GDP): 2015 32.6; 2016 27.0; 2017 27.6; 2018 29.4; 2019 33.3; 2020 35.8; 2021 34.7; 2022 32.4; 2023 31.8; 2024 31.1; 2025 31.2.",
    "Public investment (percent of GDP, selected): 2015 8.5; 2016 8.2; 2017 6.2; 2018 5.1; 2019 4.9; 2020 4.9.",
    "Private investment (percent of GDP, selected): 2015 23.8; 2016 18.5; 2017 19.4; 2018 21.4; 2019 26.1; 2020 29.6; 2021 28.5; 2022 26.5; 2023 26.3; 2024 25.8; 2025 26.2.",
    "Gross savings (percent of GDP, selected): 2015 39.5; 2016 123.1; 2017 104.8; 2018 108.4; 2019 27.2; 2020 25.7; 2021 31.4; 2022 30.5; 2023 32.8; 2024 33.6; 2025 33.8.",
    "Central government finances (percent of GDP, year beginning April 1): Total revenue and grants: 2015 33.2; 2016 30.9; 2017 26.0; 2018 24.0; 2019 27.5; 2020 27.3; 2021 27.1; 2022 26.7.",
    "Total expenditure and net lending (percent of GDP, selected): 2015 32.5; 2016 32.0; 2017 33.9; 2018 35.0; 2019 30.2; 2020 29.2; 2021 26.6.",
    "Overall balance (deficit – percent of GDP, selected): 2015 -4.6; 2016 0.6; 2017 -1.1; 2018 -11.0; 2019 -4.4; 2020 -5.7; 2021 -1.9; 2022 -0.8; 2023 -0.5; 2024 0.1.",
    "Non-mineral primary balance (percent of non-mineral GDP): 2015 -18.1; 2016 -17.6; 2017 -14.3; 2018 -17.1; 2019 -17.7; 2020 -18.5; 2021 -16.5; 2022 -18.3; 2023 -13.4; 2024 -12.3; 2025 -11.2; 2026 -10.3.",
    "Total central government debt (percent of GDP, selected): 2015 23.2; 2016 21.3; 2017 18.1; 2018 19.2; 2019 28.9.",
    "Exports of goods and services, f.o.b. (% change, selected): 2015 -24.1; 2016 14.4; 2017 -16.2; 2018 -17.5; 2019 -24.6; 2020 58.9.",
    "o/w diamonds (percent change, selected): 2015 -28.4; 2016 24.6; 2017 -17.0; 2018 9.8; 2019 -19.9; 2020 -21.8; 2021 64.2; 2022 7.4; 2023 7.5; 2024 6.5.",
    "Imports of goods and services, f.o.b. (% change, selected): 2015 -10.0; 2016 -14.6; 2017 -9.8; 2018 17.0; 2019 5.2; 2020 -4.9; 2021 11.7; 2022 -3.0; 2023 5.8; 2024 4.6.",
    "Current account balance (percent of GDP, selected): 2015 2.1; 2016 7.7; 2017 -6.0; 2018 -10.1; 2019 -3.3; 2020 1.0; 2021 2.5.",
    "Overall Balance (percent of GDP, selected): 2015 -5.4; 2016 -2.3; 2017 1.8; 2018 2.3; 2019 -8.4; 2020 -14.4; 2021 -0.7; 2022 3.4.",
    "Nominal effective exchange rate (2010=100): 2015 94.9; 2016 95.1; 2017 95.4; 2018 95.5; 2019 (not listed); 2020 (not listed).",
    "Real effective exchange rate (2010=100): 2015 105.2; 2016 105.0; 2017 105.1.",
    "Terms of trade (2005=100, selected): 2015 197.4; 2016 175.9; 2017 159.2; 2018 166.2; 2019 143.6; 2020 138.7; 2021 151.6; 2022 159.0; 2023 165.4; 2024 170.0; 2025 170.6; 2026 171.4.",
    "External public debt (percent of GDP, selected): 2015 14.3; 2016 11.1; 2017 12.4; 2018 13.0; 2019 9.9; 2020 8.7.",
    "o/w public and publicly guaranteed (percent of GDP, selected): 2015 4.7; 2016 4.2; 2017 3.8; 2018 2.6; 2019 2.4.",
    "Gross official reserves (end of period, Millions of U.S. dollars): 2015 7,546; 2016 7,189; 2017 7,502; 2018 6,657; 2019 6,172; 2020 4,944; 2021 4,818; 2022 5,178; 2023 5,914; 2024 6,724; 2025 7,504; 2026 8,345.",
    "Months of imports of goods and services (selected): 2015 13.1; 2016 13.8; 2017 12.3; 2018 10.1; 2019 7.3; 2020 (not listed).",
    "Months of non-diamond imports (selected): 2016 17.8; 2017 16.3; 2018 13.7; 2019 13.9; 2020 9.6; 2021 10.7; 2022 12.2; 2023 12.9.",
    "Percent of GDP (selected line): 2015 58.0; 2016 44.9; 2017 41.1; 2018 37.5; 2019 29.5; 2020 25.6; 2021 28.8; 2022 30.1.",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Botswana and the IMF](http://www.imf.org/external/country/BWA/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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