25 November, 2005
Botswanas credit ratings remain unchanged
GABORONE - Moodys investor credit rating report on Botswana since 2001 remains unchanged for 2005 and predicts stable out look.
The report is the fourth up-date to the markets since the initial credit rating was obtained in 2001.
The sovereign credit ratings that Moodys assigned Botswana in 2001 for long term foreign currency debt is A2 while P-1 or Prime-1 for short term currency debt and A1 for domestic currency debt.
A news release from Bank of Botswana says the report emphasises that ratings are underpinned by a strong culture of fiscal prudence, low government and external debt as well as successful track record of development based on the commitment of the authorities to address social and economic challenges.
"Average incomes and development indicators have continued to improve at rates that compare favourably with most countriesthe financial position of the country is significantly stronger than many others on similar or even higher ratings levels." The release says despite these fundamental strengths, the credit ratings remain constrained by several factors, in particular, the narrow economic base that has remained heavily dependent on diamond mining as a source of additional growth and government revenue.
It notes the recent slowdown in overall GDP growth rates and describes the progress on economic diversification away from mining as disappointing.
The report emphasises the challenge of effective meeting demands for additional public service in the face of more severe revenue constrained.
The release says Moodys have welcomed the new crawling band exchange rate mechanism introduced in May 2005 and its intended role of maintaining competitiveness and avoiding the disruptions caused by one off currency devaluations.
"They note that the mid-term review of the NDP 9 provides an opportunity for the government to give clear guidance on the priorities for economic development, and expresses cautious optimism that the work of the new Botswana Economic Advisory Council will bear fruit," says the news release.
BOPA
