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Moody’s upgrades outlook on Botswana’s 2011 sovereign credit...

Moody’s Investors Service (Moody’s) has released Botswana’s 2011 sovereigncredit rating, retaining the A2 rating for both foreign and domestic bonds and revising the outlook upwards from “negative” to “stable”.

The upgrade of the outlook reverses the decision in February 2010 to assign a negative outlook following the deterioration of the Government’s net asset position as a result of the global economic slowdown. The factors supporting the revised rating outlook include the continuing improvement in the budget position, as a result of the Government’s commitment to fiscal consolidation. This is underpinned by prospects for surpluses in both the fiscal balance and balance of payments, as well as concrete plans to realign government expenditure with revenue.

The A2 rating is supported by Botswana’s sound policy framework, strong government effectiveness, and the long-term approach to prudent management of national finances, with a view to long-term economic and social development, which Moody’s compares favourably to other resource-rich developing economies.

Nonetheless, the ratings could come under pressure again if a renewed period of further fiscal weakening undermines the net asset position in the medium term. Conversely, Moody’s notes that a combination of improved public finances and successful implementation of economic diversification strategies could lead to a ratings upgrade.

November 24, 2011

Mr Andrew Sesinyi
Head of Communications, Bank of Botswana Gaborone
(267) 3606083


Today (23/11/11) Standard & Poor’s (S & P) announced the results of a recent re-assessment of Botswana’s 2011 sovereign credit rating, following recent changes in the methodology through which it determines ratings. Similar reviews are being progressively undertaken for other country sovereign ratings issued by S & P. One of the main consequences of these changes is to align local and foreign currency sovereign ratings more closely.

As a result of the review for Botswana, the foreign currency ratings are once more retained at A-/A-2 (long-term/short-term), and the stable outlook is also affirmed. This reflects the continued confidence in the authorities’ management of the economy.

Consistent with the new criteria, the domestic currency rating has been lowered to A-/A-2 to be in line with the foreign currency rating. Explaining the adjustment, S & P highlighted the exchange rate framework and relatively underdeveloped domestic debt market as factors.

Nonetheless, this adjustment notwithstanding, S & P have continued to emphasise the track record of political stability, implementation of prudent macroeconomic policies (which includes the combination of monetary, fiscal and exchange rate policies) together with a high level of transparency regarding policy implementation, all of which are strong by emerging markets’ standards and bode well for Botswana’s future economic prospects.

For further Information, please contact:
Mr. Andrew Sesinyi
Head of Communications
(267) 3606083

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