## IMF Executive Board Concludes 2024 Article IV Consultation with Botswana _IMF News, September 10, 2024_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2024 Article IV Consultation with Botswana](https://www.imf.org/en/news/articles/2024/09/09/pr-24321-botswana-imf-executive-board-concludes-2024-article-iv-consultation) ## Other formats - [Markdown version](/en/news/articles/2024/09/09/pr-24321-botswana-imf-executive-board-concludes-2024-article-iv-consultation/index.md) - [Structured JSON version](/en/news/articles/2024/09/09/pr-24321-botswana-imf-executive-board-concludes-2024-article-iv-consultation/index.json) - [Bundle manifest](/en/news/articles/2024/09/09/pr-24321-botswana-imf-executive-board-concludes-2024-article-iv-consultation/bundle-manifest.json) ## Bibliographic details - Published: September 10, 2024 --- ### Economic outlook and growth - Growth slowed from 5.5 percent in 2022 to 2.7 percent in 2023, below long-run potential growth of 4 percent. - Growth is expected to slow further to 1 percent in 2024 primarily because of a diamond market contraction. - Growth is forecast to rebound and average 5 percent over the next two years (noting a strong recovery projected in 2025 driven by higher prices and quantities of diamonds produced). - Risks to the outlook remain elevated due to: - The emergence of cheaper lab-grown diamonds. - Uncertainty over the recovery of major export markets. - The announced sale of De Beers by its UK parent company. ### Inflation and monetary policy - Inflation has declined sharply since the peak of mid-2022 and returned to the central bank’s medium-term objective range of 3–6 percent. - Inflation has remained below the ceiling of the central bank’s medium-term objective range since July 2023 and is expected to remain in the medium term. - Staff assessment: The monetary policy stance is appropriate; underlying pressures measured by core inflation indicators seem contained and inflation expectations are well anchored. ### Fiscal position and public finances - Public debt is low at 20 percent of GDP. - Government deposits at the central bank have significantly reduced over the past decade. - Fiscal trajectory: - The fiscal deficit is projected to widen to 6 percent of GDP in FY2024, reflecting a further decline in mineral revenues and higher capital expenditure. - The government plans a fiscal expansion in FY2024 followed by two years of substantial fiscal adjustment to reach a fiscal surplus. - Staff assesses that targeting a 1 percent of GDP fiscal surplus would generate sufficient savings to protect the budget against major economic shocks. - Staff guidance: - Near term: Some fiscal relaxation is warranted given the widening output gap, but authorities should reprioritize capital projects to limit the deficit increase and ensure highest value for money. - Medium term: Planned fiscal consolidation is critical to stop depletion of government financial buffers, build resilience, and preserve fiscal sustainability. - There is scope to increase revenues alongside expenditure restraint. - Institutional reforms recommended: introduce a fiscal rule, adopt more credible medium-term budgeting, and possibly design a well-structured SWF. ### External sector and reserves - Despite lower diamond exports, FX reserves increased in 2023 supported by higher customs union receipts. - External position: 2023 external position assessed as broadly in line with fundamentals and desirable policies. - Medium-term outlook: External position should soften with FX reserves decreasing to 5 months of imports due to weak growth in customs revenues and higher government foreign debt repayments. - Gross official reserves (end of period, millions of USD) projections: - 2023: 4,757 - 2024: 4,587 - 2025: 4,879 - 2026: 5,198 - 2027: 5,600 - 2028: 5,852 - 2029: 6,014 ### Financial sector soundness and reforms - The financial sector is broadly sound, stable, and resilient. - Authorities’ plans to strengthen financial sector oversight, deepening, and inclusion are welcomed. - Faster implementation of 2023 FSAP recommendations is encouraged, including: - Move to implement Basel III liquidity standards. - Enhance risk-based supervision of banks. - Reinforce the crisis management framework (ELA, bank resolution). - Deploy macroprudential tools to address household debt risk. ### Structural priorities to accelerate growth and jobs - Fundamental shift needed toward greater private sector participation, a more diversified export base, and a more efficient public sector. - Priority actions recommended: - SOE modernization. - Improve infrastructure for doing business (internet, energy, logistics). - Trade facilitation measures. - More efficient social protection. - Financial inclusion reforms to support small entrepreneurs. - These goals could be enshrined in the new NDP, supported by time-bound and well-prioritized action plans. ### Key statistics and projections (selected) - Real GDP (annual percent change): 2022: 5.5; 2023: 2.7; 2024 (projection): 1.0; 2025 (projection): 5.2; 2026 (projection): 4.8; 2027 (projection): 4.0. - Nonmineral GDP (annual percent change): 2023: 2.6; 2024 (projection): 5.1; 2025 (projection): 4.1. - GDP per capita (US dollars): 2023: 7,250; 2024 (projection): 7,341; 2025 (projection): 8,003; 2026 (projection): 8,602. - Diamond production (millions of carats): 2022: 24.5; 2023: 25.1; 2024 (projection): 21.1; 2025 (projection): 23.3; 2026 (projection): 25.0. - Central government total revenue and grants (percent of GDP): 2023: 28.4; 2024 (projection): 28.2; 2025 (projection): 28.6. - SACU receipts (percent of GDP): 2022: 9.6; 2023: 6.4; 2024 (projection): 6.6; 2025 (projection): 6.3. - Mineral revenue (percent of GDP): 2022: 13.3; 2023: 7.4; 2024 (projection): 5.8; 2025 (projection): 9.5. - Total expenditure and net lending (percent of GDP): 2023: 28.3; 2024 (projection): 26.2. - Overall balance (deficit –) (percent of GDP): 2023: -4.7; 2024 (projection): -6.0; 2025 (projection): -1.7; 2026 (projection): -0.5; 2027 (projection): 0.5. - Total central government debt (percent of GDP): 2023: 22.6; 2024 (projection): 22.1; 2025 (projection): 20.7; 2026 (projection): 20.0. - Government deposits with the BoB (percent of GDP): 2022: 0.4; 2023: 0.6. - Current account balance (percent of GDP): 2023: -0.6; 2024 (projection): -2.0; 2025 (projection): 1.5; 2026 (projection): 1.2. - Months of imports of goods and services (gross official reserves basis): 2023: 7.3. *Press Release No. 24/321 — International Monetary Fund (September 10, 2024).* --- ## References - [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/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2024/09/09/pr-24321-botswana-imf-executive-board-concludes-2024-article-iv-consultation_