Outlook for 2011-12

• The ruling Botswana Democratic Party (BDP) is expected to maintain its dominance of the political scene despite facing a threat from a breakaway party, the Botswana Movement for Democracy (BMD), and talk of opposition unity.
• No elections are scheduled to take place over the forecast period and the president, Ian Khama, is expected to remain in office.
• The Economist Intelligence Unit forecasts that the fiscal deficit will narrow to 6.3% of GDP in fiscal year 2011/12 (April-March) and 1.9% of GDP in 2012/13, reflecting recovering revenue and reduced public capital expenditure.
• Real GDP is forecast to grow by 6.3% in 2011 and 6% in 2012 as external demand continues to recover, after growing by an estimated 7.5% in 2010.
• The currency is expected to depreciate over the forecast period, in line with the rand, to an average of P6.98:US$1 in 2011 and P7.57:US$1 in 2012.
• The weakening currency and recovering global demand will boost exports, returning the current account to balance in 2011 and to a surplus of 3.1% of GDP in 2012.

Monthly review

• To avert further internal discord in the BDP, Mr Khama has suggested that the election for the central committee at the party congress, scheduled for July, should be suspended in favour of a "compromise list" of candidates.
• Tensions within the opposition BMD have built up ahead of the party congress due in March, and the lack of a clear policy platform has been highlighted by disagreement between BMD MPs during parliamentary debate.
• Opposition parties continued to discuss co-operation, but the commitment of the third-largest opposition party, the Botswana National Front (BNF), remains uncertain.
• The 2011 budget was presented to parliament on February 7th by the minister of finance and development planning, Kenneth Matambo. The government remains rhetorically committed to balancing the budget by 2012/13.
• Mr Matambo admitted that risks to the budget remain. For example, public-sector unions have threatened strike action for higher pay because their wages have been formally frozen for three consecutive years.
• Botswana's external debt is approaching the statutory limit, and the government has extended the domestic bond issuance programme to P15bn (US$2bn), from P5bn.
• Reflecting the recovery of international demand for diamonds, Debswana has announced plans to increase production by 20% in 2011.