Country Report Botswana May 2009

Outlook for 2009-10

• The ruling Botswana Democratic Party (BDP) is expected to win the general election in October 2009, and the president, Ian Khama, will remain in power over the forecast period.
• The Economist Intelligence Unit forecasts that real GDP will contract by 14% in 2009 (January-December), as demand for diamonds slumps, before growth returns at a modest annual rate of 3.2% in 2010.
• The government will continue to pursue largely prudent policies in 2009-10, although countercyclical fiscal policy and falling revenue from diamond sales will push the budget deficit close to 12% in fiscal year 2009/10 (April-March).
• We expect inflation to ease to an average of 8.9% in 2009 and 6.4% in 2010, owing to the fall in world food and oil prices and falling domestic demand.
• The current-account deficit is forecast at 10% of GDP in 2009, as exports are hit by weak global demand for diamonds. The deficit will narrow to 8% of GDP in 2010 as the global economy picks up and exports begin to recover.

Monthly review

• A female former cabinet minister, Tebelelo Seretse, has announced that she will challenge Daniel Kwelagobe for the chairmanship of the BDP.
• A government proposal to reduce the number of sponsored tertiary-level students, which was abruptly withdrawn, has given the opposition parties an issue over which to mobilise public opinion against the BDP.
• The Botswana Congress Party has enhanced its reputation as a responsible centrist party of opposition, but the Botswana National Front remains obsessed by its own internal problems.
• The press has decided to challenge the constitutionality of the Media Practitioners Act, which it claims diminishes freedom of speech.
• The government has proposed giving US$70m for reconstruction in Zimbabwe; the opposition has suggested that the money would be better spent on education in Botswana.
• The government has announced cuts in public spending, which it projects will reduce the budget deficit to P10.9bn (US$1.5bn) in 2009/10.
• The government has approached the African Development Bank and the World Bank for P12bn to support its capital spending programme.
• Diamond production by Debswana will fall by more than half in 2009, to around 15m carats, because of the slump in global demand.
• African Copper, the owner of the Mowana mine, has accepted an offer of US$22.5m from Zambian Copper for an 85% share in the company.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;10
NAICS Code: 22;212;11