Research Update: Botswana Ratings Lowered To 'BBB+/A-2' On Expected Prolonged Fiscal And External Deficits; Outlook Stable

A prolonged weaker diamond export market will likely continue to undermine Botswana's export and fiscal revenues. In addition, expenditure pressures are rising from the increasing public sector wage bill and are likely to delay fiscal consolidation in the near term. We therefore expect that, over the next few years, Botswana will run twin deficits that gradually drain its traditionally strong savings. We are consequently lowering our long-term ratings on Botswana to 'BBB+' from 'A-' and affirming our short-term rating at 'A-2'. The outlook is stable. On March 27, 2020, S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on Botswana to 'BBB+' from 'A-' and affirmed its short-term rating at 'A-2'. The outlook is stable. We

...- A prolonged weaker diamond export market will likely continue to undermine Botswana's export and fiscal revenues. - In addition, expenditure pressures are rising from the increasing public sector wage bill and are likely to delay fiscal consolidation in the near term. - We therefore expect that, over the next few years, Botswana will run twin deficits that gradually drain its traditionally strong savings. - We are consequently lowering our long-term ratings on Botswana to '###+' from 'A-' and affirming our short-term rating at 'A-2'. The outlook is stable....

Research Update