## Botswana: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana

_IMF Staff Country Reports, March 27, 2020_

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## Bibliographic details
- Published: March 27, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513537375.002

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### Near- and medium-term growth outlook
- Gross domestic product growth is forecasted to pick up to 4.4 percent in 2020 and 5.6 percent in 2021 as the diamond industry recovers somewhat, and a new copper mine comes on stream.
- Growth will ease back to around 4 percent over the medium term.
- Risks to the outlook include:
  - faster-than-anticipated slowdown in key trading partners,
  - shifts in consumer preferences to synthetic diamonds,
  - climate shocks.

### Fiscal stance and consolidation
- The size and pace of the planned adjustment are consistent with Botswana’s fiscal space.
- The composition of the adjustment should protect efficient capital and social spending.
- Given that buffers are being eroded, it is critical that consolidation starts as envisaged in FY2020.
  - Starting consolidation as envisaged would help start addressing external imbalances and contribute to a gradual rebuilding of buffers over the medium term.

### External sector and resilience
- Addressing external imbalances is a priority linked to fiscal consolidation and buffer rebuilding.
- Building resilience to shocks is emphasized given exposure to commodity cycles and climate risks.

### Financial sector and monetary transmission reforms
- To strengthen the monetary transmission mechanism and deepen the domestic financial market there is a need to:
  - develop the secondary market for government securities,
  - leverage Fintech,
  - facilitate the attachment of collateral,
  - improve credit information.

### Key policy recommendations (summary)
- Begin fiscal consolidation in FY2020 to rebuild buffers and address external imbalances.
- Ensure consolidation protects efficient capital and social spending to preserve growth-enhancing and equity-promoting expenditures.
- Implement financial market reforms to deepen markets and improve monetary transmission, including secondary market development, Fintech adoption, collateral facilitation, and credit information enhancement.

*Source: Botswana: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana*

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_Source: https://www.imf.org/en/publications/cr/issues/2020/03/18/botswana-2019-article-iv-consultation-press-release-staff-report-and-statement-by-the-49276_