Exchange Rate Assessment in a Resource-Dependent Economy: The Case of Botswana

Corinne Delechat and Matthew Gaertner

No 2008/083, IMF Working Papers from International Monetary Fund

Abstract: The paper combines various methodologies to assessing the level of the exchange rate in Botswana, explicitly taking into account the implications of its dependency on diamond exports. Real exchange rate estimation indicates that, after a period of overvaluation, Botswana's real effective exchange rate is now broadly in line with economic fundamentals. The projected current account path is also consistent with external sustainability, defined to ensure sufficient savings of diamond wealth in order to maintain a stable import and consumption path through 2050. Sustaining consumption over the longer term will however require to address obstacles to non-diamond exports' competitiveness.

Keywords: WP; exchange rate; GDP; REER (search for similar items in EconPapers)
Pages: 29
Date: 2008-03-01
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Citations: View citations in EconPapers (11)

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