2013 IMF Article IV Consultation Discussions (1)
As per wonted practice, the International Monetary Fund (IMF) conducted Article IV consultation discussionswith the Botswana government between 28 June and 11 July. The discussions are singularly important because they are an external and objective fi nancial health check. Overall, the IMF mission is enthused by Botswana’s fi scal health; solely, a result of prudent macroeconomic management. Hence, moving forward, it is very important to stay the course. Botswana joined the IMF in 1968 and one of its primary obligations is to consent to fi scal reviews by IMF teams. These fi scal reviews are called Article IV consultation discussions and, in 2013, these were conducted between 28 June and 11 July.
The mission’s work focused on reviewing recent economic developments and prospects and policies to ensure continued macroeconomic stability and growth (IMF, 2013; Statement at the end of an IMF Mission to Botswana, Press Release No. 13/255, 12 July 2013). In conducting the discussions, the mission met with the Minister of Finance and Development Planning, Kenneth Matambo, Bank of Botswana Governor, Linah Mohohlo, Permanent Secretary in the Ministry Finance and Development Planning, Solomon Sekwakwa, senior government offi cials, development partners and representatives from the private sector and civil society (ibid). At the end of the discussions, the mission head, Lamin Leigh, issued some preliminary conclusions.
These are next summarised: real Gross Domestic Product (GDP) growth slowed down to about 4% in 2012, largely, due to a decline in the mining sector; Botswana’s fi scal and external positions remained strong, largely, due to the government’s prudent macroeconomic management; and real GDP growth is expected to remain unchanged in 2013 at about 4%. Furthermore, Leigh stated that strong non-mining growth was expected to offset the subdued mining production; Botswana’s banking system was said ‘to be profi table and well-capitalized with relatively low non-performing loans and adequate buffers to smooth shocks’; and the recent mid-term review of NDP 10 was lauded because ‘it stressed the government’s intention to reinvigorate the implementation of reforms to lay the foundations of greater private sector development and enhance greater economic diversifi cation (ibid).’
In summary, it can be concluded that the IMF is generally enthused by Botswana’s fi scal health; solely, a result of prudent macroeconomic management. In this regard, it is gratifying to note that IMF reviews, at least going back to 2009, have been positive. For instance, at the end of the 2009 consultation discussions, the mission concluded that ‘there was sound macroeconomic management, underpinned by strong institutions and good governance and that Botswana had sustained a strong macroeconomic performance in recent years (IMF, 2009; 2009 Article IV Consultation —Staff Report; Public Information Notice on the Executive Board Discussion).’
Hence, the trend must continue and, in a similar vein, efforts must be made to action the Public Finance Management Reform programme that was introduced in readiness for the preparation of the 2011/2012 budget. Concluding, Article IV Consultation discussions are an important fi scal health check. Additionally, they offer the government an opportunity to be advised on macroeconomic policy. Since 2009 (the height of the global economic downturn), the IMF has given Botswana favourable reviews. Thus, we must stay the course.