08 May 2014

The International Monetary Fund (IMF) has projected Botswana’s economy to grow moderately at 4.5 per cent in 2014, as the slowdown in diamond recovery and continued problems in electricity production and water supply will likely soften the pace of economic activity.

IMF African division chief for Botswana and Namibia, Mr Lamin Leigh said Botswana’s economy registered growth of nearly six per cent, faster than expected due to the improved mining sector.

He noted that while the mineral sector registered growth, non-mineral sector slowed down from about six per cent in 2012 to about five per cent in 2013, partly reflecting power supply disruptions and to some extent the drought.

In a statement released at the end of the Article IV Consultations held between April 22 and May 2, Mr Leigh patted Bank of Botswana as headline remained within its objective range of 3-6 per cent “which is a testament of the authorities’ good macroeconomic management.”

Talking about the 2014/15 budget, he said it should help to rebuild the net financial position of the government. He said while the current size of the Pula Fund is adequate for stabilisation purposes, the IMF mission welcomes the authorities’ intention to create additional savings from non-renewable resource revenues to transfer diamond wealth across generations.

Mr Leigh welcomed government’s initiatives highlighted in the 2014/15 budget speech meant to address some of the challenges faced by the nation such as poor performance of parastatals.

“Delivering good outcomes in the implementation of the public investment program would require improving public financial management, including in the area of project management, monitoring and oversight,” he said.

He also said the IMF mission recommends that macro prudential measures be used to address the continued rapid increase in household indebtedness and welcomed steps being taken such as strengthening the capacity of non-banking financial institutions regulatory agency.

The mission welcomed a study on the current credit reporting system conducted by government. Mr Leigh said government’s emphasis on enhancing greater financial inclusion, while committing to provide adequate safeguards to preserve the stability of the financial stability. 


He further said returning to an era of strong growth and accelerating Botswana’s convergence to higher income levels would require a set of policies to reinvigorate economy-wide productivity including addressing the skills shortage in the economy.

These include improving quality of public spending, the efficiency of the tax system and addressing skills mismatch in the labour market. Mr Leigh also commended the government on a skills development policies announced in the 2014/15 budget which should be seen as an integral part of a broader set of policy actions that include employment, investment and innovation policies in order to reinforce the links between educational system and labour market outcomes

He said government should also continue to improve the country’s competitiveness, including reducing further regulatory burden on firms to create the enabling environment to facilitate structural transformation of the economy. 


During its mission to Botswana, the IMF team met with the Minister of Finance and Development Planning, Mr Kenneth Matambo, Bank of Botswana Governor, Ms Linah Moholho, Permanent Secretary in the Ministry of Finance and Development Planning, Mr Solomon Sekwakwa, senior government officials, development partners and representatives from the private sector and civil society. Ends