The ratings on the Republic of Botswana reflect its strong public sector balance sheet, despite recent deterioration, its well-managed minerals-based economy, and a long record of political stability. These factors are offset by heavy reliance on mining sector performance despite diversification efforts, and still-significant development needs. The recent downgrade reflected our downward revision of the medium-term fiscal outlook for Botswana, taking into account the government's commitment within the National Development Plan (NDP10) to maintain historically high spending levels until at least the year ending March 31, 2012, despite a drop in revenues. We expect this deterioration of public finances to translate into higher debt accumulation than we previously expected, and the gradual dissipation of the country's asset buffers. We believe
