Following its 2023 Article IV consultation with Botswana, the IMF released its staff report. The IMF expects growth in Botswana to slow to 3.8 percent in 2023 from its estimate of 5.8 percent in 2022 due to a projected decline in diamond production, before picking up over the following two years.
It notes that inflation has fallen since August 2022, and is now below the lower bound of the central bank’s objective range (3 percent-6 percent) where it expects it to remain over the next year. The IMF stated that authorities plan fiscal expansion in FY23 followed by two years of substantial fiscal adjustment to reach a small fiscal surplus by FY25, but implementation risks are elevated. It said that the external position should soften over the medium term, with FX reserves stabilising at 5½ months of imports, while noting that the financial sector is broadly sound and stable.