International Monetary Fund (IMF) has indicated that Botswana’s economy is expected to record a fall this year, but will recover next year.
“Growth is expected to slow to about 3.5 percent in 2019, due to weaknesses in the diamond market, a severe drought, and slower growth in neighboring countries,” said Papa N’Diaye, IMF lead researcher on Wednesday following a two weeks consultation in Botswana.
The south African country’s economic growth stood at 4.5 percent in 2018.
N’Diaye said the Botswana’s current account is projected to move to negative territory, contributing to a decline in reserves.
However, IMF supports the authorities’ objective to return to a fiscal surplus over the medium term in line with their track record of fiscal discipline.
“While Botswana still has some fiscal space that allows a gradual adjustment, fiscal consolidation should start in 2020, supported by both revenue and expenditure measures. In advancing consolidation, the composition of the adjustment needs to be carefully calibrated to minimize the impact on competitiveness, growth, and the most vulnerable,” said N’Diaye.
Meanwhile IMF believes achieving Botswana’s objectives of moving to a knowledge-based economy and to high-income status by 2036 will require changing the growth model from a mining and government-led model to a private sector and export-driven.
“This entails revamping the macroeconomic policy frameworks to increase the resilience of the economy and accelerating the implementation of supply-side reforms,” said N’Diaye. Enditem