BOTSWANA: Moody’s Affirms Botswana’s A2 Rating; Maintains Stable Outlook

Tuesday May 1 2018

On 27^th April 2018, Moody’s Investors Service (“Moody’s”) affirmed the Government of Botswana’s A2 long-term issuer and senior unsecured ratings. The outlook remains stable.

This rating has was driven by the following factors:

1. Botswana’s very high fiscal strength, supported by low and stable government debt (at 15% of GDP in December 2017), the sovereign wealth fund’s (Pula Fund) large assets (about 30% of GDP as of December 2017), and Moody’s expectation that the country’s prudent fiscal policy will continue.
2. The country’s strong institutional framework which delivers macroeconomic stability. Adherence to the rule of law and low corruption levels also contribute to strong institutions, notwithstanding some weaknesses in the governance of state-owned enterprises and in delivering high returns on public investment.

The stable outlook reflects Moody’s assessment of policymakers’ continued commitment to prudent fiscal stance while utilising some of the significant fiscal policy space resulting from sizeable fiscal reserves and low government debt. These credit strengths are balanced by medium- to long-term challenges to Botswana’s economic model, structural rigidities in the labour and product markets and weak governance of state-owned enterprises.

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