Country Report Botswana November 2009

Outlook for 2010-11

• The ruling Botswana Democratic Party (BDP) won the October 2009 general election, securing another five years of government; Ian Khama is expected to remain president over the forecast period.
• Internal divisions over Mr Khama's dominance of the BDP will continue to destabilise the party during the forecast period, but the majority of members of parliament (MPs) are expected to fall into line behind him.
• Modest spending cuts and improving economic growth will help the fiscal deficit to narrow to 8.1% of GDP in 2010/11 and 6.5% of GDP in 2011/12.
• Annual consumer price inflation is forecast to remain at the upper end of the Bank of Botswana's 3-6% target range, but further monetary policy loosening is expected in 2010.
• Real GDP is forecast to grow by 3.5% in 2010 and 4% in 2011, largely owing to a recovery in diamond production.
• The current-account deficit will narrow to 1.9% of GDP in 2010 and be close to balance in 2011 as diamond exports rebound.

Monthly review

• Mr Khama has reiterated his commitment to the "four Ds" (democracy, development, dignity and discipline), and has added a fifth one, "delivery".
• Mr Khama made pragmatic choices for the four posts of "specially elected" MPs and reappointed Mompati Merafhe as vice-president, avoiding an early confrontation with the Barataphathi faction in the BDP.
• Gomolemo Motswaledi, the BDP's secretary-general until his 60-day suspension by Mr Khama in September, has been suspended for five years.
• The election of Thato Kwerepe, a protege of Mr Khama, to succeed Mr Motswaledi as secretary-general indicates that some Barataphathi supporters on the BDP's central committee have switched allegiance.
• Kenneth Matambo, one of the four "specially elected" MPs, has been appointed minister of finance and development planning.
• In support of the new emphasis on service delivery, the portfolios of several ministries that implement economic policy have been changed.
• The balance-of-payments deficit narrowed substantially in the second quarter, owing to a fall in the current-account deficit as diamond exports recovered.
• The government has confirmed plans to establish a diamond trading centre in Botswana to compete with established centres such as Antwerp and Tel Aviv.

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212