- Botswana, which last year experienced its worst recession since the 1960s, is showing signs of recovery. Botswana's economy contracted by 6 percent during 2009.
The International Monetary Fund (IMF) in its latest assessment of Botswana's economy paints a fairly positive outlook after a fierce recession last year. Especially the diamond mining sector had been hard hit, according to Robert Burgess, who led a two-week mission to the country going through fresh statistics with Batswana finance stakeholders.
"Botswana is recovering from its worst recession in more than 40 years," Mr Burgess noted after his visit. The economy had contracted by 6 percent last year "as demand for diamonds collapsed in the wake of the global financial crisis," according to the IMF analyst.
Fresh data from the Bank of Botswana had showed that, despite the key mining sector's poor performance, the country's economy was not in a general crisis. "The non-mining sector grew by a healthy 6.1 percent in 2009," Mr Burgess had observed.
Also, Gaborone authorities had been quick, responding to the crisis brought along by the collapse in the diamond market. Government's prompt easing of fiscal and monetary policies had helped to "cushion the impact of difficulties in the mining sector on the rest of the economy," the Fund concluded.
But now, authorities were downscaling these temporary measures to help the economy get through the crisis. "The economy will likely see some rebalancing this year as mining continues its gradual recovery while growth in the non-mining sector decelerates somewhat as fiscal stimulus is withdrawn," Mr Burgess assessed the current situation.
"With recovery now underway, fiscal policy is being appropriately redirected away from short-term demand management towards medium-term considerations," he added.
But while the Batswana economy is heading towards "normal" growth, government now faces challenges to bring its budgets back into balance. Government's intention is to balance the budget by 2012/13, this being called "ambitious but warranted" by the IMF.
"With less revenues available than in the past, but social challenges remaining significant, the government will need to do more with less," Mr Burgess warned. The IMF recommended Botswana to focus on a diversification of the economy and the development of a more vibrant private sector to secure future government revenues.
The Fund has yet to conclude on revised growth projections for Botswana's economy, but a preliminary indicates that the negative growth during 2009 will be outdone by this year's positive growth. According to the April numberes of the World Economic Outlook, Botswana's economy is expected to grow by 6.3 percent in 2010 and by 5.1 percent in 2011.
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