Diamonds Are Not Forever : Botswana Medium-term Fiscal Sustainability

Diamonds Are Not Forever : Botswana Medium-term Fiscal Sustainability

This paper analyzes Botswana's medium-term fiscal sustainability in view of the expected depletion of diamonds in the future. The analysis shows that in the absence of policy adjustments, Botswana's current fiscal policy strategy is unsus...

Full description

Bibliographic Details
Main Author:	Kojo, Naoko C.
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ACCOUNTING FRAMEWORK ADVERSE IMPACTS AGRICULTURE AMORTIZATION ANNUAL REPORT ANNUAL REPORTS APPROPRIATION ARREARS BANK FINANCING BASELINE SCENARIO BENCHMARK BID BOND BONDS BORROWING COST BORROWING PLAN BORROWING STRATEGY BUDGET DEFICIT BUDGET MANAGEMENT BUDGET POLICY BUDGET POLICY STATEMENT BUDGET REVIEW BUDGET SUPPORT BUDGETING CAPACITY CONSTRAINTS CAPITAL EXPENDITURE CASH BALANCE CASH BALANCES CENTRAL BANK CENTRAL GOVERNMENT CIVIL SERVANTS COMMODITY PRICE COMMODITY PRICES COMPUTABLE GENERAL EQUILIBRIUM CONTINGENT LIABILITIES CONTRACTUAL OBLIGATIONS CORPORATE INCOME TAX CORPORATE TAX RATE COST OF GOVERNMENT COUNTRY RISKS CREDITOR CREDITORS CURRENCY DEBT DEBT RATIO DEBT RATIOS DEBT REPUDIATION DEBT SERVICE DEBT SERVICES DEBTOR DEFICIT FINANCING DEVELOPMENT BANK DISBURSEMENT DIVIDENDS DOMESTIC BORROWING DOMESTIC DEBT DOMESTIC DEBTS DOMESTIC DEMAND DOMESTIC INTEREST RATE DOMESTIC MARKET DOMESTIC REVENUE DURABLE ECONOMIC CLASSIFICATION ECONOMIC CONDITIONS ECONOMIC FEASIBILITY ECONOMIC GROWTH ECONOMIC POLICY EXCHANGE RATE EXCHANGE RATES EXPECTED RETURNS EXPENDITURE EXPENDITURE CUTS EXPENDITURES EXPORTS EXTERNAL BORROWING EXTERNAL DEBT EXTERNAL SHOCKS FINANCIAL PROGRAMMING FINANCIAL RESOURCES FISCAL ANALYSIS FISCAL BALANCE FISCAL DEFICIT FISCAL DEFICITS FISCAL DISCIPLINE FISCAL FRAMEWORK FISCAL OUTCOMES FISCAL POLICIES FISCAL POLICY FISCAL POSITION FISCAL PROJECTIONS FISCAL REVENUE FISCAL RULES FISCAL SAVINGS FISCAL STANCE FISCAL STRATEGIES FISCAL STRATEGY FISCAL SUSTAINABILITY FOREIGN DEBT FOREIGN EXCHANGE FOREIGN GRANTS GDP GLOBAL ECONOMY GOVERNMENT BONDS GOVERNMENT DEBT GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT INVESTMENT GOVERNMENT REVENUE GOVERNMENT SPENDING GROWTH PROJECTIONS GROWTH RATE HEALTH OUTCOMES HUMAN CAPITAL HUMAN DEVELOPMENT INCOME INSTRUMENTS INCOME LEVEL INCOME TAX INFLATION INFLATION RATE INFRASTRUCTURE PROJECTS INHERITANCE INSURANCE INTEREST PAYMENT INTEREST PAYMENTS INTEREST RATE INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL TRANSACTIONS INVENTORY INVESTMENT ACCOUNT INVESTMENT EXPENDITURE INVESTMENT FUND INVESTMENT POLICY INVESTMENT PROJECTS INVESTMENT RETURN INVESTMENT SPENDING INVESTMENT VEHICLE ISSUANCE ISSUANCE OF GOVERNMENT SECURITIES LEGAL FRAMEWORK LIABILITY LIQUIDITY LIVING ADJUSTMENT LIVING STANDARD LOAN LOAN GUARANTEE LONG-TERM ASSETS LONG-TERM INSTRUMENTS MACROECONOMIC DATA MACROECONOMIC INDICATORS MACROECONOMIC MODEL MACROECONOMIC STABILITY MATURITY MEDIUM-TERM PROJECTION MEDIUM-TERM PROJECTIONS MID-TERM REVIEW MIDDLE INCOME COUNTRY MINISTRY OF FINANCE NATIONAL ACCOUNTS NATIONAL DEVELOPMENT NATIONAL DEVELOPMENT PLAN NATIONAL INCOME NDP NET DEBT NET LENDING NOMINAL INTEREST RATE OUTSTANDING LOANS PENSION PER CAPITA INCOME PERSONAL INCOME PORTFOLIO PORTFOLIOS POVERTY REDUCTION PRICE INDICES PRICE STABILITY PRINCIPAL REPAYMENTS PRIVATE INVESTMENT PRIVATE SECTOR PRODUCTION COSTS PROGRAMS PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC EXPENDITURE REVIEW PUBLIC FINANCES PUBLIC SECTOR PUBLIC SPENDING REAL GDP REAL GROWTH REAL GROWTH RATE RECURRENT EXPENDITURE RECURRENT EXPENDITURES REPAYMENT RESERVE RESERVES RETURN RETURNS REVENUE POLICY REVENUE SHARING SAVINGS SHORT-TERM DEBT SOLVENCY STABLE FISCAL POLICY STATUTORY DEBT LIMIT SUSTAINABILITY ANALYSIS SUSTAINABLE FISCAL POLICY TAX TAX EXEMPTIONS TAX POLICY TAX RATE TAX RATES TAX REGIME TAX REVENUE TAX ROYALTIES TAX SYSTEM TAXATION TOTAL DEBT TRADE LIBERALIZATION TRADE LIBERALIZATIONS TRADING TREASURY TREASURY BILLS UNEMPLOYMENT VALUE ADDED WAGES WEALTH WITHDRAWAL
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101116090208 http://hdl.handle.net/10986/3962

Description
Summary:	This paper analyzes Botswana's medium-term fiscal sustainability in view of the expected depletion of diamonds in the future. The analysis shows that in the absence of policy adjustments, Botswana's current fiscal policy strategy is unsustainable over the longer term, which could endanger macroeconomic stability and Botswana's reputation as Africa's success story. Ensuring medium-term sustainability of Botswana's public finances requires stronger revenue collection, through improved revenue administration, greater tax enforcement, and the rationalization of tax exemptions in order to realize the full revenue potential. Opportunities also exist to generate more revenue from the non-mining sector through changes in the tax regime. At the same time, the government needs to maximize the effectiveness of public expenditure and bring down public spending to levels that are more in line with long-term revenue prospects. A greater control over the public sector wage bill is critically important. In-house capacity for macroeconomic monitoring and fiscal analysis also needs to be enhanced further. Looking ahead, growth of a dynamic non-mining sector is crucial for Botswana not only from the fiscal sustainability point of view, but from the point of view of achieving balanced development that will create jobs and deliver durable reduction in poverty and inequality. Fiscal policy will have to play a central role in this process.

Cannot write session to /tmp/vufind_sessions/sess_b98568c9a7ko1pua624hd7ce0q