23 November, 2006
Botswana gets a high credit rating

GABORONE - Botswana has yet again received a favorable sovereign credit rating from Standard and Poor’s (S  & P) with A/A-1 foreign currency A+/ aA-1 local currency ratings.

A news release from Bank of Botswana says the rankings reflect Botswana’s continued strong financial position, a well-managed and growing economy, together with a political stability.

The public sector net external assets, and about 120 percent of current account receipts in 2006 are among the highest of any rated sovereign, thus enhancing the government capacity to absorb any potential shocks.

“While the government faces fiscal challenges in the coming years, recent budgetary outruns have been stronger than expected, and the track record of sound management supports the commitment to maintain a balanced budget over the economic cycle and to control spending growth in non priority areas” says the release.

Gross Domestic Product (GDP) is forecast to average only 4.5 per cent, which while still a respectable rate of economic growth may not be supportive of the government’ s objective of reducing unemployment and significantly increasing the living standards.

On economic diversification, Standard and Poor’s notes that progress in improving the business environment including privatization has so far been inadequate. However, there has been successful implementation of necessary reforms, which supports diversification, accelerated growth, and long- term fiscal sustainability could lead to improve ratings. BOPA