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Botswana Botswana at a Glance: 2003-04

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Botswana Botswana at a Glance: 2003-04 Country Report July 2003 Botswana Botswana at a glance: 2003-04 OVERVIEW The political scene will remain very stable. The ruling Botswana Democratic Party (BDP) will maintain its firm grip on power throughout the forecast period and is expected to win an easy victory in the legislative election, which is due by October 2004. Neither the BDP nor the president, Festus Mogae, will be threatened by any challenge from the main opposition parties, the Botswana National Front and the Botswana Congress Party. Rapid growth in the mining sector will increase real GDP growth to 7.4% in national accounts year 2003/04 (July-June). This rate of growth will not be sustained in 2004/05, but increased services activity will support real GDP growth of 3.4%. In line with the rand, the pula will appreciate to an average of P5.64:US$1 in 2003 before depreciating to an average of P6.76:US$1 in 2004. The expected increase in real GDP growth in 2003 will exceed the increase in the current-account surplus (in US dollar terms); consequently, we expect the current-account surplus to narrow to 8.7% of GDP in 2003. In 2004 the surplus will widen to 11.1% of GDP. In both years the widening of the current-account surplus (in US dollar terms) will be driven by an increase in the trade surplus. Key changes from last month Political outlook • Factionalism within the BDP has developed further, with the party chairman, Ponatshego Kedikilwe, now appearing to suggest that he will challenge Mr Mogae for the BDP party presidency in 2004. Economic policy outlook • In June the Citizen Entrepreneurial Development Agency said that since its inception in February 2001, about P400m (US$78.4m) of funding has been provided for nearly 1,000 projects. Such positive spin was intended to help counter the generally negative publicity it has received since it was set up. Economic forecast • Annual inflation rose to 11.8% in May, from 11.4% in April. Although this was still below the 12.2% recorded in February, the increase will have disappointed the Bank of Botswana, which has set an inflation target range of 4-6%. July 2003 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2003 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1356-4021 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Botswana 1 Contents 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2003-04 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 17 Economic policy 19 The domestic economy 19 Economic trends 20 Agriculture 20 Mining 20 Manufacturing 21 Communications and infrastructure 22 Financial and other services 23 Foreign trade and payments List of tables 9 Botswana: international assumptions summary 12 Botswana: forecast summary 18 Botswana: government bond issues, March to May 2003 23 Botswana: balance of payments List of figures 12 Botswana: gross domestic product 12 Botswana: consumer price inflation 19 Botswana: inflation, 2003 Country Report July 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 Botswana 3 Summary July 2003 Outlook for 2003-04 The political scene will remain very stable and the ruling Botswana Democratic Party (BDP) will maintain its firm grip on power throughout the forecast period. It is expected to win an easy victory in the next legislative election, which is due by October 2004. The government will continue to pursue largely prudent economic policies over 2003-04, framed by the Ninth National Development Plan (April 2003-March 2009). Owing mainly to growth in the mining sector, we forecast that real GDP will grow by 7.4% in national accounts year 2003/04 (July-June). In 2004/05 as growth slows in the mining sector, real GDP growth will decline to 3.4%, although it will be supported by faster growth in services. We expect average inflation to rise to 9.5% in 2003!which is outside the target range of the Bank of Botswana (the central bank). Inflation will fall to 5% in 2004, helped by lower inflation in South Africa. Partly because of changes in the value of the rand, we forecast that the average exchange rate will appreciate to P5.64:US$1 in 2003 before falling to P6.76:US$1 in 2004. The expected increase in real GDP growth in 2003 will exceed the increase in the current-account surplus (in US dollar terms); thus, we expect the current-account surplus to narrow to 8.7% of GDP in 2003. In 2004 the surplus will widen to 11.1% of GDP. In both years the widening of the current-account surplus (in US dollar terms) will be because of an increase in the trade surplus. The political scene Factionalism within the ruling BDP has re-emerged. A challenge to Mr Mogae in 2004 has now become possible. The race for primaries has heated up owing to BDP constituency rivalries. Opposition unity talks have floundered. The Botswana National Front remains divided. Mr Mogae has said that he is HIV negative. Political and economic problems with Zimbabwe have continued. Economic policy The government has considered a report on public salary structures. The first round of pula-denominated bonds has been issued. The government has said that it intends to table several bills that will affect businesses operations. The problems of the Citizen Entrepreneurial Development Agency have continued. The domestic economy Recent increased inflation data have disappointed the government. Growth in commercial bank credit has declined. The president has declared a drought. Output at Jwaneng diamond mine has increased. Five airlines have expressed an interest in Air Botswana. Botswana Telecommunications Corporation has been ordered to halt its restructuring. Foreign trade and payments The Bank of Botswana (the central bank) has revised its 2002 balance-of- payments data. Negotiations with the US on a free-trade agreement have continued. Editors: Angus Downie (editor); Paul Gamble (consulting editor) Editorial closing date: June 27th 2003 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report July 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 4 Botswana Political structure Official name Republic of Botswana Form of state Unitary republic Legal system Roman-Dutch law; cases in rural areas are heard by customary courts National legislature National Assembly consisting of 40 members elected by universal suffrage (an additional 17 constituencies are to be created for the next election), the president, the attorney-general and four members appointed by the president. A 15-member House of Chiefs advises on tribal matters National elections October 1999 (legislative); next legislative election due by October 2004 Head of state President, chosen by the National Assembly National government The president, his appointed vice-president and cabinet (reshuffled in September 2002) Main political parties Botswana Democratic Party (BDP; the ruling party); Botswana National Front (BNF); Botswana Congress Party (BCP); Botswana People’s Party (BPP); New Democratic Front (NDF); Botswana Alliance Movement (BAM) President Festus Mogae Vice-president Ian Khama Key ministers Agriculture Johnnie Swartz Communications, science & technology Boyce Sebetela Education George Kgoroba Finance & development planning Baledzi Gaolathe Foreign affairs & international co-operation Mompati
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