Publication:
Small Countries with Volatile Revenue: Botswana and Bhutan

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dc.contributor.authorKojo, Naoko C.
dc.date.accessioned2015-08-13T18:39:26Z
dc.date.available2015-08-13T18:39:26Z
dc.date.issued2015-01
dc.description.abstractBhutan and Botswana share a number of similarities. The two countries, land locked small states, have grown rapidly over the past few decades, boosted by sustained, large-scale inflows of foreign exchange. Botswana’s annual real growth rate averaged 9 percent over the past 40 years, driven by diamond exploration, whereas Bhutan has taken full advantage of generous foreign aid inflows to achieve an average growth rate of 8 percent per year for the past 30 years. However, after decades of rapid growth, the production base of both countries remains very narrow and the economy continues to directly or indirectly dependent on government demand. Job creation, particularly for the youths, is an important policy issue. Despite these similarities, Bhutan and Botswana exhibit an interesting contrast with regard to the management of volatile foreign exchange inflows, and its macroeconomic consequences. Notwithstanding the serious impact of the recent global crisis, today Botswana’s external position remains solid, guarded by sizable international reserves and low external debt. In contrast, Bhutan has accumulated large external debt and its international reserves are under significant pressure. This paper discusses Bhutan and Botswana’s experiences with managing volatile foreign exchange inflows. It assesses the nature and domestic economic consequences of volatile flows, and analyzes the policy measures that have been used to respond to revenue volatility. The structure of the paper is as follows. Section two analyzes Botswana’s experience of managing large, volatile diamond export earnings. Section three reviews more recent experience of Bhutan. Section four draws policy lessons from the experience of two countries. Finally section five concludes the paper.en
dc.identifierhttp://documents.worldbank.org/curated/en/2015/07/24788392/small-countries-volatile-revenue-botswana-bhutan
dc.identifier.doi10.1596/22394
dc.identifier.urihttps://hdl.handle.net/10986/22394
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectTARIFFS
dc.subjectGOVERNMENT SAVINGS
dc.subjectMONETARY POLICY
dc.subjectDEFICIT
dc.subjectHOLDING
dc.subjectREGULATORY FRAMEWORK
dc.subjectGOVERNMENT EXPENDITURES
dc.subjectACCOUNTING
dc.subjectLEGAL AGREEMENTS
dc.subjectSHORT-TERM INTEREST RATES
dc.subjectSTOCK
dc.subjectBANK RATE
dc.subjectMACROECONOMIC MISMANAGEMENT
dc.subjectMACROECONOMIC MANAGEMENT
dc.subjectINTEREST
dc.subjectGUARANTEES
dc.subjectINVESTMENT FUND
dc.subjectINTEREST RATE
dc.subjectEXCHANGE
dc.subjectBALANCE OF PAYMENTS
dc.subjectMACROECONOMIC POLICY
dc.subjectRESERVE REQUIREMENTS
dc.subjectLIQUIDITY
dc.subjectDEVELOPING COUNTRIES
dc.subjectGOVERNMENT BORROWING
dc.subjectPOLITICAL ECONOMY
dc.subjectREVENUES
dc.subjectPORTFOLIO
dc.subjectFISCAL POLICY
dc.subjectBONDS
dc.subjectDEVALUATION
dc.subjectMACROECONOMIC CONDITIONS
dc.subjectLOAN
dc.subjectDISCOUNT
dc.subjectTAX
dc.subjectINCOME TAX
dc.subjectBUDGETING
dc.subjectRESERVE
dc.subjectGOVERNMENT GUARANTEES
dc.subjectINFLATION
dc.subjectINSTRUMENTS
dc.subjectBOOM-BUST CYCLE
dc.subjectCREDIBILITY
dc.subjectBUDGET
dc.subjectCENTRAL BANK
dc.subjectWITHDRAWALS
dc.subjectMACROECONOMIC STABILITY
dc.subjectPOLICY RESPONSE
dc.subjectLABOR MARKET
dc.subjectINVESTMENT SPENDING
dc.subjectINDEBTEDNESS
dc.subjectBENEFICIARY
dc.subjectCURRENCY
dc.subjectEXPORT GROWTH
dc.subjectDISBURSEMENT
dc.subjectMARKET PRACTICE
dc.subjectPORTFOLIOS
dc.subjectGOVERNMENT INDEBTEDNESS
dc.subjectINCOME INEQUALITY
dc.subjectINFLATIONARY PRESSURES
dc.subjectBOOM-BUST CYCLES
dc.subjectDIVIDEND PAYMENT
dc.subjectTRADING
dc.subjectINTEREST RATES
dc.subjectMONETARY FUND
dc.subjectINVESTMENT FUNDS
dc.subjectDEBT
dc.subjectINFLATIONARY PRESSURE
dc.subjectFINANCIAL FLOWS
dc.subjectINFLATION RATE
dc.subjectSALES AGREEMENT
dc.subjectPUBLIC FINANCE
dc.subjectLONG-TERM INSTRUMENTS
dc.subjectCURRENT ACCOUNT TRANSACTIONS
dc.subjectEXCESS LIQUIDITY
dc.subjectINCOME LEVELS
dc.subjectDOMESTIC DEBT
dc.subjectLOANS
dc.subjectRESERVES
dc.subjectPRIVATE CAPITAL
dc.subjectDEBT SERVICE
dc.subjectFINANCIAL SYSTEM
dc.subjectRECURRENT EXPENDITURE
dc.subjectMONETARY AUTHORITY
dc.subjectLEGAL FRAMEWORK
dc.subjectFINANCE
dc.subjectBANK POLICY
dc.subjectPUBLIC INVESTMENT
dc.subjectTAXES
dc.subjectFIXED EXCHANGE RATE
dc.subjectEXPENDITURE
dc.subjectTRANSACTIONS
dc.subjectINFRASTRUCTURE INVESTMENT
dc.subjectAUCTIONS
dc.subjectEQUITY
dc.subjectCREDIT EXPANSION
dc.subjectMACROECONOMIC ENVIRONMENT
dc.subjectMACROECONOMIC INSTABILITY
dc.subjectHUMAN CAPITAL
dc.subjectCAPITAL OUTLAYS
dc.subjectGOOD
dc.subjectGOVERNMENT BUDGET
dc.subjectFINANCIAL CRISIS
dc.subjectFUTURE
dc.subjectCREDIT EXPANSIONS
dc.subjectRETURNS
dc.subjectCAPACITY CONSTRAINTS
dc.subjectTREASURY BILLS
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectINTEREST PAYMENT
dc.subjectLOCAL BUSINESSES
dc.subjectPRICE STABILITY
dc.subjectREPAYMENT
dc.subjectFINANCIAL PERFORMANCE
dc.subjectGOVERNMENT REVENUE
dc.subjectEXPENDITURES
dc.subjectAMORTIZATION
dc.subjectLIQUIDITY MANAGEMENT
dc.subjectCURRENT ACCOUNT DEFICIT
dc.subjectSHARES
dc.subjectHUMAN CAPITAL DEVELOPMENT
dc.subjectREAL EXCHANGE RATE
dc.subjectMARKET
dc.subjectFOREIGN EXCHANGE
dc.subjectTRADE LIBERALIZATION
dc.subjectINVESTMENT POLICY
dc.subjectPUBLIC DEBT
dc.subjectBALANCE OF PAYMENT
dc.subjectTREASURY
dc.subjectSOLVENCY
dc.subjectCURRENCIES
dc.subjectECONOMIC DEVELOPMENT
dc.subjectINVESTMENT RATES
dc.subjectOPEN MARKET
dc.subjectGOODS
dc.subjectSECURITY
dc.subjectINVESTMENT
dc.subjectDEBT SERVICES
dc.subjectSHARE
dc.subjectPOVERTY
dc.subjectFINANCIAL RISKS
dc.subjectCAPITAL REQUIREMENT
dc.subjectDEBT SERVICE PAYMENTS
dc.subjectFINANCIAL ASSETS
dc.subjectBID
dc.subjectCAPITAL INFLOWS
dc.subjectREVENUE
dc.subjectEXTERNAL DEBT
dc.subjectPROFIT
dc.subjectINVESTMENTS
dc.subjectLENDING
dc.subjectDEBT REPAYMENT
dc.subjectCHECK
dc.subjectTRUST FUND
dc.subjectCREDIT GROWTH
dc.subjectMACROECONOMIC POLICIES
dc.subjectREPOS
dc.subjectEXCHANGE RATE
dc.subjectFISCAL DISCIPLINE
dc.subjectGOVERNMENT INVESTMENT
dc.subjectINSTRUMENT
dc.subjectDEBT SERVICING
dc.subjectPROFITS
dc.subjectLIABILITIES
dc.subjectCOMMODITY PRICES
dc.subjectSHORT-TERM LIQUIDITY
dc.subjectLONG-TERM ASSETS
dc.subjectDEVELOPMENT BANK
dc.subjectHUMAN DEVELOPMENT
dc.subjectINVESTING
dc.titleSmall Countries with Volatile Revenueen
dc.title.subtitleBotswana and Bhutanen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crosscuttingsolutionareaFragility, Conflict, and Violence
okr.date.disclosure2015-07-16
okr.date.doiregistration2025-05-05T12:27:52.237890Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/2015/07/24788392/small-countries-volatile-revenue-botswana-bhutan
okr.globalpracticeMacroeconomics and Fiscal Management
okr.guid413221467997599192
okr.identifier.externaldocumentum090224b082ffdcf6_1_0
okr.identifier.internaldocumentum24788392
okr.identifier.report98089
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/07/16/090224b082ffdcf6/1_0/Rendered/PDF/Small0countrie00Botswana0and0Bhutan.pdfen
okr.region.countryBhutan
okr.region.countryBotswana
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicPrivate Sector Development::Emerging Markets
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.unitMacro Fiscal Mgmt - GP (GMFDR)
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