COVID-19: Recovery underway for Botswana’s economy, says IMF

Botswana’s economy has been “severely” impacted by the COVID-19 pandemic, however relief measures implemented by the authorities helped in moderating the immediate effects, the International Monetary Fund said in a new report.

The report, titled: ‘2021 Article IV Mission to Botswana,’ was released on Friday.

“Recovery is underway, but uncertainty is high and risks are dominated by the evolution of the pandemic and lower-than-expected diamond revenue.

“The pandemic exacerbated Botswana’s economic challenges. While strict containment measures helped to limit the spread of the virus and save lives, the heavy economic reliance on diamonds and contact-intensive activities caused a sharp GDP contraction, one of the deepest in sub-Saharan Africa,” the IMF said.

As a way forward, the IMF said accessing and successfully rolling out vaccines remain key to sustaining the recovery.

The fund said, “The first priority remains securing and ensuring successful rollout of vaccines to a share of the population large enough to keep the pandemic under control and prevent health systems from being overwhelmed.

“The next priority is to enhance Botswana’s resilience to shocks and advance supply side reforms to promote private sector activity and diversify its sources of growth.”

Other recovery measures to be taken include advancing fiscal reform, enhancing policy frameworks, and implementing the Economic Recovery and Transformation Plan to help secure a balanced recovery, enhance resilience, and transform the economy, the IMF advised.

It further stated that Botswana, before the pandemic, was contending with structural challenges, persistent negative external shocks and delays in adjustment that caused a weakening of its international reserves and the fiscal position amid high unemployment.

Commending the country’s recent increase in exchange rate peg, IMF urged the Bank of Botswana to use the flexibility afforded by its current exchange rate regime to help the economy adjust to shocks, ensure external viability, and facilitate structural transformation.