Botswana: 2022 Article IV Consultation -Press Release; Staff Report; and Statement by the Executive Director for Botswana

This 2022 Article IV Consultation discusses that a successful vaccination campaign, prudent macroeconomic management, and strong demand for diamonds have allowed Botswana to recover to its pre-pandemic output level. Implementing the planned medium-term fiscal consolidation will rebuild buffers and financial assets for future generations. The consolidation plan will achieve fiscal surplus over the medium term and rebuild the Government Investment Account to shield the economy against shocks and build an asset base. Bringing inflation back within the Bank of Botswana’s objective range will require additional monetary tightening. In the absence of further tightening, the broad-based rise in inflation risks de-anchoring inflation expectations and requiring even sharper tightening later with negative effects on growth. A successful implementation of the Reset Agenda will enhance Botswana’s resilience and ensure sustained high-job rich growth. Implementation of the plan will diversify the economy toward financial services (facilitated by fintech), manufacturing, and tourism, and transform Botswana into a high-income status as per Vision 2036. Reforms should include enhancing accountability, competition, and governance, deepening trade integration, and a faster energy transition.