Country Report Botswana March 2011

Outlook for 2011-12: Policy trends

The government will continue to pursue largely prudent economic policies, although its ability to maintain macroeconomic stability and fiscal discipline will be tested by the lingering effects of the global recession, particularly the large fiscal deficit. Recent reports from the World Bank and, in early 2011, the IMF have also called for stringent control of public expenditure to ensure long-term budget sustainability. However, the capacity to contain spending will be tested by the increasing militancy of the public sector unions, which are currently threatening to strike if their demands for a significant salary increase are not met. Moreover, despite the emphasis on fiscal consolidation in the recent budget speech, there is little sign of any significant reduction in spending on a range of recently introduced social programmes at a time when the BDP's electoral dominance is being challenged. An economic diversification drive, also launched recently, stresses the government's intention to use its own purchasing power to develop and support local businesses, while the cabinet will soon consider a draft policy on citizen economic empowerment that, depending on how the issue is handled, could deter foreign investment.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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