Country Report Botswana October 2009

Outlook for 2010-11

• The ruling Botswana Democratic Party (BDP) won the October 2009 general election, securing another five years in government. The president, Ian Khama, will remain in power over the outlook period.
• Internal divisions will continue to destabilise the BDP, especially as the Barataphathi faction, which resists Mr Khama's dominance, has been strengthened by the election.
• Modest spending cuts and improving economic growth will help the fiscal deficit to narrow to 7.8% of GDP in fiscal year 2010/11 (April 1st-March 21st) and 6.3% of GDP in 2011/12.
• Real GDP is forecast to grow by 3.5% in 2010 and 4% in 2011, largely owing to a recovery in diamond production.
• Annual consumer price inflation is forecast to remain at the upper end of the central bank's 3-6% target range, but further monetary policy loosening is expected in 2010.
• The current-account deficit will narrow to 1.5% of GDP in 2010 and return to balance in 2011, as diamond exports rebound.

Monthly review

• The BDP increased its share of the vote and its representation in parliament at the general election held on October 16th, despite conflict in the party; international observers declared the election to be free and fair.
• The Botswana National Front, the main opposition party, lost half of its seats, mostly to the benefit of the Botswana Congress Party, which increased its representation in the National Assembly from one to four seats.
• The Court of Appeal upheld a High Court ruling that supported Mr Khama's suspension of Gomolemo Motswaledi, the BDP's secretary-general, and prevented him from standing at the election.
• Most official debt issuance in September was of six-month T-bills rolled over from bills issued in March, suggesting that the government intends to finance its deficits mainly from foreign rather than domestic borrowing.
• Real GDP grew by 20% quarter on quarter during the second quarter, bringing year-on-year growth in the quarter to 1.3%; the rebound was due to the resumption of diamond production following mine closures in the first quarter.
• Annual consumer price inflation edged up to 6.1% in August, taking it once more outside the central bank's 3–6% target range.
• Exarro, a South African-based mining group, has expressed support for the proposed trans-Kalahari rail link between Botswana and Namibia.

This report covers the following industry codes:
SIC Code: 60;10;47
NAICS Code: 52;212;48