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 in the future. The government has built a track record of prudent fiscal policies, however, and is expected to curb spending growth in non-priority areas in the years ahead, to secure sustainable budget outcomes. Fiscal deficits since 2001/2002 have
