Working Paper

Small Countries with Volatile Revenue : Botswana and Bhutan

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collection.link.213
https://openknowledge.worldbank.org/handle/10986/11866
collection.name.213
Other papers
dc.contributor.author
Kojo, Naoko C.
dc.date.accessioned
2015-08-13T18:39:26Z
dc.date.available
2015-08-13T18:39:26Z
dc.date.issued
2015-01
dc.date.lastModified
2021-04-23T14:04:08Z
dc.description.abstract
Bhutan 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.identifier
http://documents.worldbank.org/curated/en/2015/07/24788392/small-countries-volatile-revenue-botswana-bhutan
dc.identifier.uri
http://hdl.handle.net/10986/22394
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
TARIFFS
dc.subject
GOVERNMENT SAVINGS
dc.subject
MONETARY POLICY
dc.subject
DEFICIT
dc.subject
HOLDING
dc.subject
REGULATORY FRAMEWORK
dc.subject
GOVERNMENT EXPENDITURES
dc.subject
ACCOUNTING
dc.subject
LEGAL AGREEMENTS
dc.subject
SHORT-TERM INTEREST RATES
dc.subject
STOCK
dc.subject
BANK RATE
dc.subject
MACROECONOMIC MISMANAGEMENT
dc.subject
MACROECONOMIC MANAGEMENT
dc.subject
INTEREST
dc.subject
GUARANTEES
dc.subject
INVESTMENT FUND
dc.subject
INTEREST RATE
dc.subject
EXCHANGE
dc.subject
BALANCE OF PAYMENTS
dc.subject
MACROECONOMIC POLICY
dc.subject
RESERVE REQUIREMENTS
dc.subject
LIQUIDITY
dc.subject
DEVELOPING COUNTRIES
dc.subject
GOVERNMENT BORROWING
dc.subject
POLITICAL ECONOMY
dc.subject
REVENUES
dc.subject
PORTFOLIO
dc.subject
FISCAL POLICY
dc.subject
BONDS
dc.subject
DEVALUATION
dc.subject
MACROECONOMIC CONDITIONS
dc.subject
LOAN
dc.subject
DISCOUNT
dc.subject
TAX
dc.subject
INCOME TAX
dc.subject
BUDGETING
dc.subject
RESERVE
dc.subject
GOVERNMENT GUARANTEES
dc.subject
INFLATION
dc.subject
INSTRUMENTS
dc.subject
BOOM-BUST CYCLE
dc.subject
CREDIBILITY
dc.subject
BUDGET
dc.subject
CENTRAL BANK
dc.subject
WITHDRAWALS
dc.subject
MACROECONOMIC STABILITY
dc.subject
POLICY RESPONSE
dc.subject
LABOR MARKET
dc.subject
INVESTMENT SPENDING
dc.subject
INDEBTEDNESS
dc.subject
BENEFICIARY
dc.subject
CURRENCY
dc.subject
EXPORT GROWTH
dc.subject
DISBURSEMENT
dc.subject
MARKET PRACTICE
dc.subject
PORTFOLIOS
dc.subject
GOVERNMENT INDEBTEDNESS
dc.subject
INCOME INEQUALITY
dc.subject
INFLATIONARY PRESSURES
dc.subject
BOOM-BUST CYCLES
dc.subject
DIVIDEND PAYMENT
dc.subject
TRADING
dc.subject
INTEREST RATES
dc.subject
MONETARY FUND
dc.subject
INVESTMENT FUNDS
dc.subject
DEBT
dc.subject
INFLATIONARY PRESSURE
dc.subject
FINANCIAL FLOWS
dc.subject
INFLATION RATE
dc.subject
SALES AGREEMENT
dc.subject
PUBLIC FINANCE
dc.subject
LONG-TERM INSTRUMENTS
dc.subject
CURRENT ACCOUNT TRANSACTIONS
dc.subject
EXCESS LIQUIDITY
dc.subject
INCOME LEVELS
dc.subject
DOMESTIC DEBT
dc.subject
LOANS
dc.subject
RESERVES
dc.subject
PRIVATE CAPITAL
dc.subject
DEBT SERVICE
dc.subject
FINANCIAL SYSTEM
dc.subject
RECURRENT EXPENDITURE
dc.subject
MONETARY AUTHORITY
dc.subject
LEGAL FRAMEWORK
dc.subject
FINANCE
dc.subject
BANK POLICY
dc.subject
PUBLIC INVESTMENT
dc.subject
TAXES
dc.subject
FIXED EXCHANGE RATE
dc.subject
EXPENDITURE
dc.subject
TRANSACTIONS
dc.subject
INFRASTRUCTURE INVESTMENT
dc.subject
AUCTIONS
dc.subject
EQUITY
dc.subject
CREDIT EXPANSION
dc.subject
MACROECONOMIC ENVIRONMENT
dc.subject
MACROECONOMIC INSTABILITY
dc.subject
HUMAN CAPITAL
dc.subject
CAPITAL OUTLAYS
dc.subject
GOOD
dc.subject
GOVERNMENT BUDGET
dc.subject
FINANCIAL CRISIS
dc.subject
FUTURE
dc.subject
CREDIT EXPANSIONS
dc.subject
RETURNS
dc.subject
CAPACITY CONSTRAINTS
dc.subject
TREASURY BILLS
dc.subject
GOVERNMENT EXPENDITURE
dc.subject
INTEREST PAYMENT
dc.subject
LOCAL BUSINESSES
dc.subject
PRICE STABILITY
dc.subject
REPAYMENT
dc.subject
FINANCIAL PERFORMANCE
dc.subject
GOVERNMENT REVENUE
dc.subject
EXPENDITURES
dc.subject
AMORTIZATION
dc.subject
LIQUIDITY MANAGEMENT
dc.subject
CURRENT ACCOUNT DEFICIT
dc.subject
SHARES
dc.subject
HUMAN CAPITAL DEVELOPMENT
dc.subject
REAL EXCHANGE RATE
dc.subject
MARKET
dc.subject
FOREIGN EXCHANGE
dc.subject
TRADE LIBERALIZATION
dc.subject
INVESTMENT POLICY
dc.subject
PUBLIC DEBT
dc.subject
BALANCE OF PAYMENT
dc.subject
TREASURY
dc.subject
SOLVENCY
dc.subject
CURRENCIES
dc.subject
ECONOMIC DEVELOPMENT
dc.subject
INVESTMENT RATES
dc.subject
OPEN MARKET
dc.subject
GOODS
dc.subject
SECURITY
dc.subject
INVESTMENT
dc.subject
DEBT SERVICES
dc.subject
SHARE
dc.subject
POVERTY
dc.subject
FINANCIAL RISKS
dc.subject
CAPITAL REQUIREMENT
dc.subject
DEBT SERVICE PAYMENTS
dc.subject
FINANCIAL ASSETS
dc.subject
BID
dc.subject
CAPITAL INFLOWS
dc.subject
REVENUE
dc.subject
EXTERNAL DEBT
dc.subject
PROFIT
dc.subject
INVESTMENTS
dc.subject
LENDING
dc.subject
DEBT REPAYMENT
dc.subject
CHECK
dc.subject
TRUST FUND
dc.subject
CREDIT GROWTH
dc.subject
MACROECONOMIC POLICIES
dc.subject
REPOS
dc.subject
EXCHANGE RATE
dc.subject
FISCAL DISCIPLINE
dc.subject
GOVERNMENT INVESTMENT
dc.subject
INSTRUMENT
dc.subject
DEBT SERVICING
dc.subject
PROFITS
dc.subject
LIABILITIES
dc.subject
COMMODITY PRICES
dc.subject
SHORT-TERM LIQUIDITY
dc.subject
LONG-TERM ASSETS
dc.subject
DEVELOPMENT BANK
dc.subject
HUMAN DEVELOPMENT
dc.subject
INVESTING
dc.title
Small Countries with Volatile Revenue
en
dc.title.subtitle
Botswana and Bhutan
en
dc.type
Working Paper
en
okr.crosscuttingsolutionarea
Fragility, Conflict, and Violence
okr.date.disclosure
2015-07-16
okr.doctype
Publications & Research
okr.doctype
Publications & Research :: Working Paper
okr.docurl
http://documents.worldbank.org/curated/en/2015/07/24788392/small-countries-volatile-revenue-botswana-bhutan
okr.globalpractice
Macroeconomics and Fiscal Management
okr.googlescholar.linkpresent
yes
okr.identifier.externaldocumentum
090224b082ffdcf6_1_0
okr.identifier.internaldocumentum
24788392
okr.identifier.report
98089
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/07/16/090224b082ffdcf6/1_0/Rendered/PDF/Small0countrie00Botswana0and0Bhutan.pdf
en
okr.region.country
Bhutan
okr.region.country
Botswana
okr.topic
Finance and Financial Sector Development :: Debt Markets
okr.topic
Finance and Financial Sector Development :: Access to Finance
okr.topic
Private Sector Development :: Emerging Markets
okr.topic
Macroeconomics and Economic Growth :: Economic Stabilization
okr.unit
Macro Fiscal Mgmt - GP (GMFDR)

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