PESA
PESA Editorial on Botswana: 1H2022/23

PESA Editorial on Botswana: 1H2022/23

Botswana’s economy has recovered from the shock caused by the COVID-19 pandemic. Real GDP growth is projected to increase from an annual average of 2.3% Botswana’s economy has recovered from the shock of the shock caused by the COVID-19 pandemic. Real GDP growth is projected to increase from an annual average of 2.3% for 2019 to 2021, to 4.3% in 2022. Inflation is projected to increase from an annual average of 3.8% for 2019 to 2021, to 8.9% in 2022. The elevated inflation is caused by the sanctions against Russia which have increased the price of crucial imports. In the medium-term period from 2023 to 2025, real GDP growth is projected to decrease to an annual average of 4.0%. Meanwhile, inflation is projected to decrease to an average of 4.5% over the medium-term from 2023 to 2025.

PESA Editorial on Botswana: 1H2022/23
PESA Editorial on Botswana: 1H2022/23

The Government of Botswana’s debt has been steadily increasing since 2020. Botswana’s gross public debt is projected to increase from an annual average of 18.9% of GDP for 2019 to 2021, to 23.2% of GDP in 2022. The increase in public debt is largely due to the Government of Botswana implementing fiscal expansion to support economic recovery from the shock caused by the global lockdown response to the COVID-19 pandemic. The fiscal deficit is projected to narrow from an annual average of -8.1% of GDP for 2019 to 2021, to -3.1% of GDP in 2022. This shows the government shifting fiscal stance towards austerity as the economy recovers. In the medium-term period from 2023 to 2025, the fiscal balance is projected to improve to an annual average of 1.3% of GDP. Therefore, public debt is projected to decrease to an average of 21.0% of GDP over the medium-term from 2023 to 2025.

PESA Editorial on Botswana: 1H2022/23
PESA Editorial on Botswana: 1H2022/23

Botswana’s external sector was severely affected by the COVID-19 pandemic in 2020 but the sector has begun recovering due to the rebound in commodity prices, particularly diamond prices which have a significant impact on export earnings. Botswana’s current account balance is projected to improve from an annual average of -USD 1.0 billion (approx. -6.1% of GDP) for 2019 to 2021, to USD 89.0 million (approx. 0.5% of GDP) in 2022. In the medium-term period from 2023 to 2025, the current account surplus is projected to widen to an annual average of USD 681.7 million (approx. 3.2% of GDP). This illustrates a continuous improvement in the current account balance despite the uncertainty of how long current rebound in commodity prices which is primarily driven by the impact of sanctions against Russia will last. Therefore, Batswana authorities will have an opportunity to take advantage of the country’s position as the third-largest diamond exporter; and invest in further diversification of the country’s exports away from the continued reliance on diamonds.

PESA Editorial on Botswana: 1H2022/23
PESA Editorial on Botswana: 1H2022/23

Botswana is scheduled to hold its national elections in 2024 and the coming election campaigning cycle is still a long way ahead. Incumbent President H.E. Mokgweetsi Masisi will most likely be vying for a second term in office in order to correct a legacy marred by skirmishes with former President Seretse Khama Ian Khama and corruption scandals. The current political climate remains relatively calm despite pressures due to economic hardships affecting Batswana following the COVID-19 pandemic. President H.E. Mokgweetsi Masisi will also seeks to play a more meaningful role in resolving regional security concerns amongst SADC countries such as the insurgence in Mozambique and continuing conflicts in the Democratic Republic of Congo. This remains one of the central priorities for Botswana in addition to its interests as a member of SACU.


Siyaduma Biniza

Siya is the Executive Director at PESA.

Siyaduma Biniza

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