{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Botswana",
  "publication": "IMF News, August 31, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/08/30/pr23296-botswana-imf-executive-board-concludes-2023-article-iv-consultation-with-botswana",
  "canonical": "https://www.imf.org/en/news/articles/2023/08/30/pr23296-botswana-imf-executive-board-concludes-2023-article-iv-consultation-with-botswana",
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  "summary": "Following a strong recovery of almost 12 percent growth in 2021, Botswana’s economy grew by 5.8 percent in 2022, significantly above the long-run average of 4 percent. The ongoing recovery from the pandemic primarily reflects elevated mining production.",
  "publishDate": "2023-08-31",
  "sections": [
    {
      "heading": "Macro outlook and recent performance",
      "content": "- Real GDP growth: 11.9 percent in 2021; 5.8 percent in 2022; expected 3.8 percent in 2023; projected 4.1 percent in 2024 and 4.3 percent in 2025.\n- Growth drivers: ongoing recovery primarily reflects elevated mining production; projected decline in diamond production drives the 2023 slowdown, with rebound in 2024–2025 due to higher prices and quantities of diamonds produced.\n- Inflation: declined sharply since August of 2022 and is now below the lower bound of the central bank's objective range; projected to revert to and remain within the central bank’s objective range.\n- Unemployment: remains elevated at 25 percent."
    },
    {
      "heading": "Fiscal stance and public finances",
      "content": "- Authorities’ plan: fiscal expansion in FY2023 followed by two years of substantial fiscal adjustment to reach a small fiscal surplus by FY2025.\n- IMF view: fiscal consolidation is critical to preserve fiscal sustainability and support accumulation of foreign exchange reserves.\n- Recommended fiscal measures:\n  - Contain expenditures.\n  - Mobilize additional revenues.\n  - Consider introduction of an expenditure rule to enhance credibility of the medium-term adjustment path.\n- Executive Board noted some Directors urged cautious implementation of FY2023 planned fiscal expansion to avoid hindering disinflation and to support rebuilding fiscal buffers."
    },
    {
      "heading": "External sector and reserves",
      "content": "- FX reserves: after declining in 2022, reserves have stabilized and remained at adequate levels at end-2022; projected to stabilize at 5 ½ months of imports over the medium term, together with gradual recovery in diamond production and prices.\n- Outlook risks: heavily dependent on demand for diamonds and the global economic cycle."
    },
    {
      "heading": "Financial sector and FSAP findings",
      "content": "- Financial sector assessment: appears broadly sound, stable, and resilient; 2023 FSAP found resilience to a wide range of shocks.\n- Risks and recommendations:\n  - Monitor contagion risk from banks to non-bank financial institutions due to concentration of large non-bank deposits.\n  - Further enhance banking supervision on the basis of a risk-based framework; close data gaps for calibration of macroprudential tools.\n  - Strengthen crisis management and safety net framework; deposit insurance scheme introduced.\n  - Financial Stability Council should develop and coordinate a comprehensive framework for crisis management and resolution.\n  - Enhance interbank and government bond markets to support financial sector development, public financial management, and monetary policy transmission.\n  - Enhance financial inclusion by strengthening digital financial services and regulatory frameworks for lending to MSMEs."
    },
    {
      "heading": "Monetary and exchange rate policy",
      "content": "- Directors’ assessment: monetary policy stance remains appropriate given slowdown in inflation; authorities should be ready to raise rates if inflationary pressures emerge.\n- Recommendations:\n  - Strengthen Bank of Botswana (BoB) governance frameworks and further enhance monetary policy transmission mechanism.\n  - Support refinements to the REER targeting exchange rate regime to bolster competitiveness and reduce potential frictions between monetary and exchange rate policies."
    },
    {
      "heading": "Structural reform priorities highlighted by Directors",
      "content": "- Advance structural reforms to promote economic diversification and private sector development to boost growth, employment potential, and reduce inequality.\n- Policy priorities emphasized:\n  - Trade facilitation and integration.\n  - Comprehensive SOE reforms.\n  - Improving the business environment.\n  - Enhancing climate change resilience.\n  - Implementing the digitalization strategy.\n  - More targeted support for high-productivity, export-led sectors."
    },
    {
      "heading": "Key statistics (selected, as reported)",
      "content": "- Real GDP (annual percent change): 3.0 (2019), -8.7 (2020), 11.9 (2021), 5.8 (2022), 3.8 (2023), 4.1 (2024), 4.3 (2025), 4.0 (2026).\n- Mineral sector (annual percent change): -3.7 (2019), -26.5 (2020), 29.8 (2021), 7.5 (2022), 0.6 (2023), 2.6 (2024), 3.5 (2025), 2.4 (2026), 2.1 (2027), 2.3 (2028).\n- Nonmineral (annual percent change): 5.2 (2019), -3.5 (2020), 7.8 (2021), 5.3 (2022), 4.7 (2023), 4.5 (2024), 4.6 (2025), 4.4 (2026).\n- GDP per capita (US dollars): 6,679 (2019), 5,863 (2020), 7,239 (2021), 7,738 (2022), 7,741 (2023), 8,013 (2024), 8,417 (2025), 8,943 (2026), 9,446 (2027), 10,034 (2028).\n- GNI per capita (US dollars): 6,329 (2019), 5,868 (2020), 7,169 (2021), 7,515 (2022), 7,538 (2023), 7,793 (2024), 8,188 (2025), 8,693 (2026), 9,193 (2027), 9,761 (2028).\n- Consumer prices (average): 2.7 (2019), 1.9 (2020), 6.7 (2021), 12.2 (2022), 5.9 (2023).\n- Diamond production (millions of carats): 23.7 (2019), 16.9 (2020), 22.7 (2021), 24.5 (2022), 25.1 (2023), 25.9 (2024), 26.6 (2025), 27.1 (2026), 27.8 (2027).\n- Gross official reserves (end of period, Millions of US$): 6,172 (2019), 4,944 (2020), 4,806 (2021), 4,281 (2022), 4,800 (2023), 5,196 (2024), 5,369 (2025), 5,516 (2026), 5,692 (2027), 5,884 (2028).\n- Months of imports of goods and services (non-diamond basis): 13.4 (2019), 9.3 (2020), 7.7 (2021), 7.4 (2022).\n- Central government debt (percent of GDP): 21.5 (2019), 23.5 (2020), 22.1 (2021), 20.8 (2022), 21.3 (2023), 20.3 (2024), 18.9 (2025), 18.4 (2026), 18.2 (2027), 17.9 (2028).\n- Current account balance (percent of GDP): -6.9 (2019), -10.4 (2020), -1.4 (2021), 2.9 (2022), 0.8 (2023), 1.5 (2024), 1.1 (2025).\n- Exports of goods and services, f.o.b. (% change): -17.3 (2019), -25.3 (2020), 70.3 (2021), 6.0 (2022).\n- o/w diamonds (exports % change): -19.8 (2019), -21.8 (2020), 80.0 (2021), -13.3 (2022), 10.4 (2023).\n\nSource: IMF press release, August 31, 2023.\n\n---\n\n\n References\n\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/2023/08/30/pr23296-botswana-imf-executive-board-concludes-2023-article-iv-consultation-with-botswana"
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    "Published: August 31, 2023",
    "Real GDP growth: 11.9 percent in 2021; 5.8 percent in 2022; expected 3.8 percent in 2023; projected 4.1 percent in 2024 and 4.3 percent in 2025.",
    "Growth drivers: ongoing recovery primarily reflects elevated mining production; projected decline in diamond production drives the 2023 slowdown, with rebound in 2024–2025 due to higher prices and quantities of diamonds produced.",
    "Inflation: declined sharply since August of 2022 and is now below the lower bound of the central bank's objective range; projected to revert to and remain within the central bank’s objective range.",
    "Unemployment: remains elevated at 25 percent.",
    "Authorities’ plan: fiscal expansion in FY2023 followed by two years of substantial fiscal adjustment to reach a small fiscal surplus by FY2025.",
    "IMF view: fiscal consolidation is critical to preserve fiscal sustainability and support accumulation of foreign exchange reserves.",
    "Recommended fiscal measures:",
    "Executive Board noted some Directors urged cautious implementation of FY2023 planned fiscal expansion to avoid hindering disinflation and to support rebuilding fiscal buffers.",
    "FX reserves: after declining in 2022, reserves have stabilized and remained at adequate levels at end-2022; projected to stabilize at 5 ½ months of imports over the medium term, together with gradual recovery in diamond production and prices.",
    "Outlook risks: heavily dependent on demand for diamonds and the global economic cycle.",
    "Financial sector assessment: appears broadly sound, stable, and resilient; 2023 FSAP found resilience to a wide range of shocks.",
    "Risks and recommendations:",
    "Directors’ assessment: monetary policy stance remains appropriate given slowdown in inflation; authorities should be ready to raise rates if inflationary pressures emerge.",
    "Recommendations:",
    "Advance structural reforms to promote economic diversification and private sector development to boost growth, employment potential, and reduce inequality.",
    "Policy priorities emphasized:",
    "Real GDP (annual percent change): 3.0 (2019), -8.7 (2020), 11.9 (2021), 5.8 (2022), 3.8 (2023), 4.1 (2024), 4.3 (2025), 4.0 (2026).",
    "Mineral sector (annual percent change): -3.7 (2019), -26.5 (2020), 29.8 (2021), 7.5 (2022), 0.6 (2023), 2.6 (2024), 3.5 (2025), 2.4 (2026), 2.1 (2027), 2.3 (2028).",
    "Nonmineral (annual percent change): 5.2 (2019), -3.5 (2020), 7.8 (2021), 5.3 (2022), 4.7 (2023), 4.5 (2024), 4.6 (2025), 4.4 (2026).",
    "GDP per capita (US dollars): 6,679 (2019), 5,863 (2020), 7,239 (2021), 7,738 (2022), 7,741 (2023), 8,013 (2024), 8,417 (2025), 8,943 (2026), 9,446 (2027), 10,034 (2028).",
    "GNI per capita (US dollars): 6,329 (2019), 5,868 (2020), 7,169 (2021), 7,515 (2022), 7,538 (2023), 7,793 (2024), 8,188 (2025), 8,693 (2026), 9,193 (2027), 9,761 (2028).",
    "Consumer prices (average): 2.7 (2019), 1.9 (2020), 6.7 (2021), 12.2 (2022), 5.9 (2023).",
    "Diamond production (millions of carats): 23.7 (2019), 16.9 (2020), 22.7 (2021), 24.5 (2022), 25.1 (2023), 25.9 (2024), 26.6 (2025), 27.1 (2026), 27.8 (2027).",
    "Gross official reserves (end of period, Millions of US$): 6,172 (2019), 4,944 (2020), 4,806 (2021), 4,281 (2022), 4,800 (2023), 5,196 (2024), 5,369 (2025), 5,516 (2026), 5,692 (2027), 5,884 (2028).",
    "Months of imports of goods and services (non-diamond basis): 13.4 (2019), 9.3 (2020), 7.7 (2021), 7.4 (2022).",
    "Central government debt (percent of GDP): 21.5 (2019), 23.5 (2020), 22.1 (2021), 20.8 (2022), 21.3 (2023), 20.3 (2024), 18.9 (2025), 18.4 (2026), 18.2 (2027), 17.9 (2028).",
    "Current account balance (percent of GDP): -6.9 (2019), -10.4 (2020), -1.4 (2021), 2.9 (2022), 0.8 (2023), 1.5 (2024), 1.1 (2025).",
    "Exports of goods and services, f.o.b. (% change): -17.3 (2019), -25.3 (2020), 70.3 (2021), 6.0 (2022).",
    "o/w diamonds (exports % change): -19.8 (2019), -21.8 (2020), 80.0 (2021), -13.3 (2022), 10.4 (2023).",
    "[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)",
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