Botswana 

Botswana country policy

Policy established 01 May 2012

• Early warning signal 250 mln euro
• - of which was used as at 2012-04-30 0 mln euro
• Open zonder beperkingen

Country class: 3

Botswana country facts

Atradius Dutch State Business Economic Research 
Country Report last updated :  17 August 2010
Country :  BOTSWANA

Political Situation
Stable

Head of state
President Ian Khama (Botswana Democratic Party, BDP, since April 2008).

Form of government
Government of Botswana Democratic Party (since independence in 1966).

Internal Economic Situation
Recovery

General situation
Economic growth in the past decades has proven to be high but volatile and very dependant on diamond prices. Most of the country is too arid for effective agriculture. Luxury tourism (safari) has become a second source of income. Volatile diamond prices and potential droughts make Botswana’s economy vulnerable for external shocks. Botswana is the largest diamond producing country in the world, both in terms of value and carats. Although this sector provides large revenues for the government, it employs relatively few people and is a finite source of income. The international financial crisis had a huge impact on the diamond price and demand for luxury tourism resulting in a massive recession. A recovery is taking place this year due to increasing diamond prices.   
The government will step in with spending programs leading to a large budget deficit of 9.5% this year. 
 
External Economic Situation
Current Account Deficit

Main sources of foreign exchange
Diamonds (65% XG in 2008), copper and nickel (14%), meat (2%) and tourism (46% XS).

Main foreign markets
UK (53%), SACU (9%), Zimbabwe (4%).

Main expenses of foreign exchange
Capital goods (31% of imports), food (13%), energy (14%)

Balance of payments
Botswana’s BoP is overly reliant on diamond exports.  
This proves the weakness of an economy without any diversification. Enormous forex reserves prove to be a sufficient buffer. External debt is rising quiet rapidly.