Kojo, Naoko C.2012-03-192012-03-192010-11-01https://hdl.handle.net/10986/3962This 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.CC BY 3.0 IGOACCOUNTINGACCOUNTING FRAMEWORKADVERSE IMPACTSAGRICULTUREAMORTIZATIONANNUAL REPORTANNUAL REPORTSAPPROPRIATIONARREARSBANK FINANCINGBASELINE SCENARIOBENCHMARKBIDBONDBONDSBORROWING COSTBORROWING PLANBORROWING STRATEGYBUDGET DEFICITBUDGET MANAGEMENTBUDGET POLICYBUDGET POLICY STATEMENTBUDGET REVIEWBUDGET SUPPORTBUDGETINGCAPACITY CONSTRAINTSCAPITAL EXPENDITURECASH BALANCECASH BALANCESCENTRAL BANKCENTRAL GOVERNMENTCIVIL SERVANTSCOMMODITY PRICECOMMODITY PRICESCOMPUTABLE GENERAL EQUILIBRIUMCONTINGENT LIABILITIESCONTRACTUAL OBLIGATIONSCORPORATE INCOME TAXCORPORATE TAX RATECOST OF GOVERNMENTCOUNTRY RISKSCREDITORCREDITORSCURRENCYDEBTDEBT RATIODEBT RATIOSDEBT REPUDIATIONDEBT SERVICEDEBT SERVICESDEBTORDEFICIT FINANCINGDEVELOPMENT BANKDISBURSEMENTDIVIDENDSDOMESTIC BORROWINGDOMESTIC DEBTDOMESTIC DEBTSDOMESTIC DEMANDDOMESTIC INTEREST RATEDOMESTIC MARKETDOMESTIC REVENUEDURABLEECONOMIC CLASSIFICATIONECONOMIC CONDITIONSECONOMIC FEASIBILITYECONOMIC GROWTHECONOMIC POLICYEXCHANGE RATEEXCHANGE RATESEXPECTED RETURNSEXPENDITUREEXPENDITURE CUTSEXPENDITURESEXPORTSEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL SHOCKSFINANCIAL PROGRAMMINGFINANCIAL RESOURCESFISCAL ANALYSISFISCAL BALANCEFISCAL DEFICITFISCAL DEFICITSFISCAL DISCIPLINEFISCAL FRAMEWORKFISCAL OUTCOMESFISCAL POLICIESFISCAL POLICYFISCAL POSITIONFISCAL PROJECTIONSFISCAL REVENUEFISCAL RULESFISCAL SAVINGSFISCAL STANCEFISCAL STRATEGIESFISCAL STRATEGYFISCAL SUSTAINABILITYFOREIGN DEBTFOREIGN EXCHANGEFOREIGN GRANTSGDPGLOBAL ECONOMYGOVERNMENT BONDSGOVERNMENT DEBTGOVERNMENT EXPENDITUREGOVERNMENT EXPENDITURESGOVERNMENT INVESTMENTGOVERNMENT REVENUEGOVERNMENT SPENDINGGROWTH PROJECTIONSGROWTH RATEHEALTH OUTCOMESHUMAN CAPITALHUMAN DEVELOPMENTINCOME INSTRUMENTSINCOME LEVELINCOME TAXINFLATIONINFLATION RATEINFRASTRUCTURE PROJECTSINHERITANCEINSURANCEINTEREST PAYMENTINTEREST PAYMENTSINTEREST RATEINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL TRANSACTIONSINVENTORYINVESTMENT ACCOUNTINVESTMENT EXPENDITUREINVESTMENT FUNDINVESTMENT POLICYINVESTMENT PROJECTSINVESTMENT RETURNINVESTMENT SPENDINGINVESTMENT VEHICLEISSUANCEISSUANCE OF GOVERNMENT SECURITIESLEGAL FRAMEWORKLIABILITYLIQUIDITYLIVING ADJUSTMENTLIVING STANDARDLOANLOAN GUARANTEELONG-TERM ASSETSLONG-TERM INSTRUMENTSMACROECONOMIC DATAMACROECONOMIC INDICATORSMACROECONOMIC MODELMACROECONOMIC STABILITYMATURITYMEDIUM-TERM PROJECTIONMEDIUM-TERM PROJECTIONSMID-TERM REVIEWMIDDLE INCOME COUNTRYMINISTRY OF FINANCENATIONAL ACCOUNTSNATIONAL DEVELOPMENTNATIONAL DEVELOPMENT PLANNATIONAL INCOMENDPNET DEBTNET LENDINGNOMINAL INTEREST RATEOUTSTANDING LOANSPENSIONPER CAPITA INCOMEPERSONAL INCOMEPORTFOLIOPORTFOLIOSPOVERTY REDUCTIONPRICE INDICESPRICE STABILITYPRINCIPAL REPAYMENTSPRIVATE INVESTMENTPRIVATE SECTORPRODUCTION COSTSPROGRAMSPUBLIC DEBTPUBLIC EXPENDITUREPUBLIC EXPENDITURE REVIEWPUBLIC FINANCESPUBLIC SECTORPUBLIC SPENDINGREAL GDPREAL GROWTHREAL GROWTH RATERECURRENT EXPENDITURERECURRENT EXPENDITURESREPAYMENTRESERVERESERVESRETURNRETURNSREVENUE POLICYREVENUE SHARINGSAVINGSSHORT-TERM DEBTSOLVENCYSTABLE FISCAL POLICYSTATUTORY DEBT LIMITSUSTAINABILITY ANALYSISSUSTAINABLE FISCAL POLICYTAXTAX EXEMPTIONSTAX POLICYTAX RATETAX RATESTAX REGIMETAX REVENUETAX ROYALTIESTAX SYSTEMTAXATIONTOTAL DEBTTRADE LIBERALIZATIONTRADE LIBERALIZATIONSTRADINGTREASURYTREASURY BILLSUNEMPLOYMENTVALUE ADDEDWAGESWEALTHWITHDRAWALWorld Bank10.1596/1813-9450-5480