Tuesday, March 2, 2021

Botswana will struggle to cut spending ahead of elections – report

Botswana is poised to struggle with cutting spending this year ahead of the general elections slated for October, according to a forecast by the UK-based Business Monitor International (BMI).

“We believe Botswana will continue in its bid to rebuild its fiscal buffers with its next budget, due in February, through clamping down on current spending. We note that it may struggle to do this in an election year, though improved export receipts will help it in its aim,” BMI said in a brief, made available to The Telegraph this week.

BMI believes that with general elections in October, political parties in Botswana are beginning their campaigns and the ruling Botswana Democratic Party will maintain its dominance as the opposition coalition has begun to fragment already.

“Participation rates are in focus, with a campaign to increase voter turnout underway, though this is unlikely to have great bearing on the election given its current success rate,” said BMI.

On the country’s economy, BMI said they forecast real GDP growth of 4.7 percent in 2014 (from an estimated 4.4 percent in 2013), followed by 4.9 percent in 2015.

“The slight pickup in Botswana will come on the back of rising diamond exports, falling inflation and loose monetary policy, coupled with continued investment into developing new mining industries in the country,” said BMI. ?The researchers believe that the Bank of Botswana will continue with its accommodative monetary policy through 2014, in a bid to stimulate domestic demand.

The latest interest rate cut of 50 basis points in December 2013 is in line with this stance, and with price growth at multi-year lows there is scope for the bank to make further cuts if necessary.?“We continue to note the risks to our forecasts posed by ongoing revisions to Botswana’s national accounts estimates. Amid ongoing efforts by Statistics Botswana to more accurately portray the size and structure of the economy, GDP estimates remain subject to frequent and often notable adjustments,” says BMI.

Given Botswana’s dependence on imported energy and food, BMI says, any unexpected rise in global food or oil prices beyond our current projections, “would pose a risk to our growth outlook.”

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