The ratings on the Republic of Botswana, the highest among rated African governments, are supported by: Balance-sheet strength and expenditure flexibility. Public-sector net assets, at 106% of GDP, are among the highest of rated sovereigns. Development expenditures, budgeted at 17% of GDP in the fiscal year beginning today, is an acknowledged candidate for cuts to accommodate expected increases in health spending, including anti-retroviral therapy for AIDS patients, costing 1%-3% of GDP per year. Although the HIV-AIDS epidemic is almost certain to reduce general government surpluses from their long-term average of about 8% of GDP, structural surpluses worth 1%-2% of GDP remain achievable. A strong and well-managed minerals economy, dominated by diamonds, generating one-third of GDP and one-half of budget revenue.
