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INTERNATIONAL MONETARY FUND
IMF Country Report No. 12/234
BOTSWANA: 2012 ARTICLE IV CONSULTATION
August 2012
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2012 Article IV consultation with Botswana, the following documents have been released and are included in this package:
â–ª Staff Report for the 2012 Article IV consultation, prepared by a staff team of the IMF, following discussions that ended on June 1, 2012, with the officials of Botswana on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 10, 2012. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
â–ª Informational Annex prepared by the IMF.
â–ª Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank.
â–ª Public Information Notice (PIN) summarizing the views of the Executive Board.
The document listed below has been or will be separately released.
Selected Issues Paper
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
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© 2012 International Monetary Fund
Front Matter Page
INTERNATIONAL MONETARY FUND
BOTSWANA
STAFF REPORT FOR THE 2012 ARTICLE IV CONSULTATION
July 10, 2012
KEY ISSUES
Outlook and risks: Amidst a fragile global economic environment, real GDP growth is projected to moderate to 4 percent in 2012 from 5 percent in 2011. The uncertain external environment poses downside risks to mineral export demand and calls for a delicate balancing act in the implementation of macroeconomic policies.
Near-term policy mix and managing global spillovers: A tight fiscal stance, adopted in the FY2012/13 budget to help rebuild the policy buffers, combined with an accommodative monetary policy stance, is appropriate. In the event that further adverse global spillovers lead to a significant decline in diamond revenues, staff advises the authorities to allow the automatic stabilizers to operate on the revenue side.
Medium-term fiscal consolidation: Reining in spending is the main pillar of the authorities’ fiscal consolidation strategy. Efforts to reduce the wage bill should be accompanied by reforms of government employment and wage policies. Broadening the tax base would provide a stronger foundation to the fiscal consolidation objectives.
Monetary operations, financial intermediation and stability: The government’s domestic bond program should help to share the burden of sterilization costs between the Ministry of Finance and the Bank of Botswana. Efforts to broaden the population’s access to financial services and deepen financial intermediation should be combined with adequate safeguards to preserve the stability of the financial system.
Inclusive growth, unemployment, and institutional and capacity development: Botswana faces long-term development and structural challenges that it needs to address to move the country to a higher level of development. Current redistributive aspects of fiscal policy should be complemented with policies that tackle inequality through fostering effective investment in education and health and enhancing financial inclusion. Faster economic growth, a change in public sector employment policies, and measures to address the skill mismatch in the labor market should help to reduce the unemployment rate. The authorities’ ongoing mid-term review of their National Development Plan (NDP 10) provides an opportunity to consider measures that would foster institutional and capacity development in support of long-term growth.
Approved By
Anne-Marie Gulde-Wolf and Dhaneshwar Ghura
Discussions took place in Gaborone May 21– June 1, 2012. The team comprised Messrs. Leigh (head), David, Garcia-Verdu, Park and Stepanyan (all AFR). Ms. Otsuka from the World Bank also participated in some meetings.
Contents
Recent Developments, Outlook, and Risks
A. Recent Developments
B. Outlook and Risks
Policy Discussions
A. Policy Theme 1: Managing the Near-Term Macroeconomic Policy Mix and Spillovers from the Global Economy
B. Policy Theme 2: Rebuilding Policy Buffers through High-Quality Medium-Term Fiscal Consolidation
C. Policy Theme 3: Strengthening Monetary Operations, Financial Intermediation, and Stability
D. Policy Theme 4: Promoting Inclusive Growth, Addressing Unemployment, and Fostering Institutional and Capacity Development
Staff Appraisal
Tables
1. Selected Economic and Social Indicators, 2008–2017
2a. Central Government Operations, 2008/09—2016/17
2b. Central Government Operations, 2008/09–2016/17
2c. Central Government Operations, 2008/09—2016/17
2d. Central Government Operations, 2008/09—2016/17
2e. Central Government Partial Balance Sheet, 2005–2012
3. Balance of Payments, 2008–2017
4. Monetary Survey, 2008–2017
5. Banking System Prudential Indicators, 2005–2012
6. Millennium Development Goals, 1990–2011
Figures
1. Recent Economic Developments
2. Middle-Income Countries in Sub-Saharan Africa: Regional Comparison
Boxes
1. Structure and Performance Financial Sector
Appendixes
I. Exchange Rate and External Balance Assessment
II. Responding to Spillovers from the Global Economy
III. Botswana: Long-Term Fiscal Sustainability Benchmarks
IV. Strengthening Government Institutions
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INTERNATIONAL MONETARY FUND
BOTSWANA
STAFF REPORT FOR THE 2012 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
July 10, 2012
Prepared By
African Department
Contents
FUND RELATIONS
JOINT WORLD BANK AND IMF WORK PROGRAM
STATISTICAL ISSUES
TABLES
1. Common Indicators Required for Surveillance
Front Matter Page
INTERNATIONAL MONETARY FUND
BOTSWANA
STAFF REPORT FOR THE 2012 ARTICLE IV CONSULTATION—DEBT SUSTAINABILITYANALYSIS
July 10, 2012
Approved By
Anne-Marie Gulde-Wolf and Dhaneshwar Ghura
Prepared by the Staff Representatives for the 2012 Consultation with Botswana
Front Matter Page
Public Information Notice (PIN) No. 12/91
FOR IMMEDIATE RELEASE
July 31, 2012
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