Moody’s affirms the “A2” stable outlook sovereign credit rating for Botswana

Moody’s Investors Service has released an update of Botswana’s 2017 sovereign credit rating, which reaffirms the rating of ‘A2’ for long and short-term bonds denominated in both domestic and foreign currency, as well as a stable outlook.

The ratings are underpinned by the country’s strong fiscal position, with low debt burden, a sizeable sovereign wealth fund, strong institutions and well designed macroeconomic frameworks, as well as stable political environment.

Moody’s (Pic By East African Development Bank)

According to a press release, the stable outlook is premised on prospects for continued fiscal prudence and achievement of a balanced budget in the medium term. Expected growth in diamond output, progress in enhancing diamond value addition and development of the services sector also contribute to the rating.

“There is a possibility of a medium term upward revision of the ratings if progress is made in diamond beneficiation, economic diversification, and the implementation of efficiency-enhancing public sector reforms as well as private sector development leading to a marked reduction in unemployment,” it said.

“However, in the near term, a substantial depletion of fiscal reserves and/or a rapid increase in public debt could lead to a downgrade. In the medium term, slow progress in the implementation of structural reforms and limited economic diversification would undermine the fiscal position and put downward pressure on the rating.”