A team of the International Monetary Fund (IMF) which visited Botswana two weeks ago has given a thumb up to President Mokgweetsi Masisi’s intention to liberalize Botswana’s visa and work permits’ policies.
The policy has hitherto been identified as a hindrance to economic growth by both the IMF, World Bank as well as private sector mouth piece ÔÇô Business Botswana.
Masisi, who ascended to the Presidency office in April 2018 announced at the first ever state leader press conference held in the capital Gaborone some two weeks back that the government also intends to reduce bureaucratic requirements, and privatize inefficient enterprises.
On Friday, the IMF team said that following the announcement by the Masisi administration, Botswana’s medium-term prospects are favorable assuming a decisive and prompt implementation of key fiscal policy measures.
The changes, IMF said, should also entail market-friendly reforms that enable private sector development, lowers unemployment, reduces income inequality, and diversifies exports into selected sectors.
While approving Masisi’s reforms, the IMF however cautioned that it will be important for the country to contain the growth of recurrent spending, improve the efficiency of social programs, and protect public investment while prioritizing projects with the highest payoffs.
The IMF team which met with Minister responsible for Finance, Kenneth Matambo as well as the Bank of Botswana (BOB) governor Moses Pelaelo also called on Botswana to undertake revenue and expenditure reforms alongside policies to reduce income inequality.
The call comes at a time when most of Botswana’s State Owned Enterprises (SOEs) including Air Botswana, Botswana Oil, Botswana Meat Commission and Water Utilities Corporation (WUC) are struggling financially.
The caution also follows high levels of unemployment, inequality as well as limited economic growth.
Botswana’s Real GDP growth decelerated to 2.4 percent in 2017 owing to declines in copper and nickel production and lower activity in construction and trade, while the fiscal and external accounts were nearly balanced, inflation was about 3 percent, the exchange rate was stable, the financial sector remained sound and well capitalized, and public debt continued to be low at about 19 percent of GDP.
“The diversification and job creation efforts requires focus on prompt and bold market friendly reforms that can reduce the costs of doing business, improve skills in the labor force, make the public sector more efficient, privatize key enterprises, and enable competition and entry of firms in sectors with latent comparative advantage”, reads part of the IMF statement released late Friday.
The team also said that the success of the proposed reforms will depend on the speed and determination with which they are implemented, including an accelerated passage of supporting legislation as well as accountability among government entities.