The International Monetary Fund (IMF) projects Botswana’s economic growth for 2022 to hit 4.3 percent as the country continues a steadfast recovery from the COVID-19 shocks.
The lender deployed a delegation to Gaborone, led by the Assistant Director in the IMF African Department and Mission Chief for the Republic of Botswana, Papa N’Diaye, to assess the country’s situation.
Following the conclusion of the visit that lasted from May 4-18, N’Diaye in a statement issued an assessment of the country’s economic situation.
“While higher demand for and prices of diamonds could result in some windfall for Botswana, higher food and energy prices will weigh on fiscal and external balances and threaten food security and energy affordability for the most vulnerable populations,” he said.
“A successful vaccination campaign, prudent macroeconomic management, and strong demand for diamonds have allowed Botswana to recover to its pre-pandemic output level. The economy grew by 11.4 percent in 2021. Fiscal and current account deficits both narrowed sharply, and foreign reserves stabilized. Over 95 percent of the eligible population were fully vaccinated by May 2022 and only 22 days of schooling were lost due to pandemic lockdowns,” he added.
N’Diaye however spelled that despite the positives, challenges still remain, including a spike in unemployment and an increase in poverty.
He added that inflation exceeded the central bank’s medium-term objective range of 3 – 6 percent in 2021 and increased sharply in the first months of 2022.
“To combat rising inflation, the Bank of Botswana raised the newly-introduced Monetary Policy Rate (MoPR) by 51 basis points in April 2022. With inflation at around 10 percent, real rates in negative territory and inflation expectations rising, additional tightening will be required. The financial sector was assessed to be safe and sound, but the impact of higher rates, declining liquidity and the recent monetary policy reform will have to be monitored,” the statement read.
Source : CGTN