Botswana's Debt Sustainability: Tracking the path

Haile K. Taye
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Haile K. Taye: Botswana Institute for Development Policy Analysis

No 28, Working Papers from Botswana Institute for Development Policy Analysis

Abstract: This paper argues that as was the case in many countries, the Botswana economy was hit hard by the global recession at the end of 2008 in which the demand for its minerals was drastically reduced (according to some estimates as much as 50%). And since mineral revenue significantly contributes (about 40% to 50%) to total government revenue, this has put a constraint on the revised government budget as reflected in the 2008/09 and 2009/10 Government Budgets. Consequently, in addition to relying on its substantial foreign exchange reserves, the government requested a loan from the African Development Bank to carry out its planned projects and to support the overall budget. The fiscal policy question of interest is then, given that Botswana has a very small previously accumulated debt, one of the highest global credit ratings, and substantial foreign exchange reserves (usually around 20 months of imports) to rely on, should the recently acquired loan be of any serious fiscal concern?

Keywords: Botswana; Economic crisis; Debt sustainability (search for similar items in EconPapers)
JEL-codes: E32 R10 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2011-03
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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