The Republic of Botswana is situated in southern part of Africa.

It is quite a small country with a

population of over 2 million people. During colonial era, it was under the rule of Britain and got
its independence in 1966. It saw a major turnaround from one of the poorest countries in Africa
with a per capita GDP of USD 70 to one of the fastest growing economy in the world, with
annual growth rate of about 9% and a per capita GDP (on PPP basis) of about USD 14,800.1

Botswana’s growth has been mainly driven by the good performance of Mining sector and
prudent Policy making. Botswana’s monetary policy has played an important role in the well
functioning of the economy. It has focused mainly on monetary stability, which encompasses
the objective of a low and stable rate of inflation. Another important factor is the availability of
diamond revenues. The country also has a running budget surplus since 1980’s. The budget
surpluses are due to fiscal policy of avoiding pro-cyclical policy and adopting a medium term
balanced budget. This has also resulted in low external debt in the economy.

But Botswana is still marred by problems. Botswana has not done well on the investment
targets and investment has also only been concentrated in few sectors of the economy namely,
mining and government sector. Botswana faces another problem in the export sector, that only
a few products like diamond, beef, soda ashes etc. make a major chunk of its export portfolio.
The manufacturing sector is still in the nascent stage and industrial base is still small. Also, the
domestic market is small, which limits the trade opportunities available. Poverty is still
widespread and remains a major concern. The existence of poverty points out to the fact that
the iconic growth of the Botswana’s economy has not been equitable. Another reason for
poverty has been the high rate of unemployment existing in the economy. The high incidence of
the HIV/ AIDS poses major health and social concerns.

Report will try to have a overview of the status of the policy frameworks of Botswana. It will also
try to identify macroeconomic areas in which Botswana has been performing well and areas in
which it has been lagging. It will contain an analysis of the macroeconomic stability indicators
(inflation, budget deficit and other indicators). It will also analyse current government plans and
give an overall qualitative view of the economy.

It will also look at the institutional arrangements that prevail in Botswana, their ability to
implement programmes, the capacity constraints and the remedies possible. Report shall also
look at the trade policies, the labour market policy framework and the various challenges facing
Botswana (i.e. HIV/AIDS, poverty, lack of human capital etc). At the end, we will like to make
some recommendations based on the findings of the report which may help Botswana
overcome the challenges it currently faces.

Word: 491

Submitted by
Krishna Rao Boddepalli (0911316)
Kshitiz Jain (0911098)
Nishant (0911109)
Tushar Sharma (0911066)
Varun Garg (0911068)

1
IMF 2010 report