A strong public sector balance sheet and expenditure flexibility. A well-managed minerals economy. A long record of political and macroeconomic stability. A narrow economic base. High development needs and an HIV/AIDS pandemic that pose significant policy and financial challenges. The ratings on the Republic of Botswana are supported by the strength of the public sector's balance sheet and expenditure flexibility. Net external assets, at about 130% of current account receipts (CARs) in 2004, are among the highest recorded in any rated sovereign, bolstering the government's capacity to absorb potential shocks. Spending pressures due to the HIV/AIDS pandemic (up to 3%-4% of GDP annually in additional health care and social spending) combined with stagnating mineral revenues could represent important fiscal challenges
