Botswana Gains Top Rating From Agencies

MOODY's Investor Services and Standard & Poor's have awarded Botswana the highest sovereign credit rating in Africa, but warned that the fight against HIV/AIDS needs more money.

"We have maintained our rating the highest credit rating in Africa," Bank of Botswana spokesman Chepete Chepete said after the agencies made their announcements on Friday.

Moody's assigned Botswana a longterm sovereign credit rating of -A2 and a short-term foreign currency rating of Prime -1. The country was also given a domestic currency rating of A1 and a "stable" outlook which the state has maintained since 2001.

Standard & Poor's re-affirmed its long-term local currency rating of A+ and a short-term rating of A-1 in the same category. The long and short-term ratings for foreign currency were also left at A- and A-1.

The reports put Botswana in the same league as Greece and Poland.

The two international agencies said Botswana's ratings reflect favourable debt and liquidity positions, and praised the government's "prudent management of diamonds export earnings". These earnings had enabled rapid expansion of infrastructure and increase the standard of living since independence in 1966.

However, both agencies said the country faced "severe challenges" in controlling spending on HIV/AIDS related treatment, education and other social welfare programmes, the costs of which had continued to escalate.

Botswana provides free HIV/AIDS drugs, and pays for education up to university level for all its citizens.

"In their 2003 report, Moody's has emphasised that policymakers will need to continue to focus on economic diversification. While progress has been slow there are encouraging signs as the contribution to GDP (Gross Domestic Product) from the nonmining sectors have steadily increased over the years," the central bank said in a statement.

These sectors included tourism and finance, which have been growing at an impressive rate, the bank said.

source - Prof Malema - Business Day 1st Edition