July 24, 2012 |
|Botswana has a well-managed minerals economy with a long track record of |
political stability, and prudent economic policies.
We are affirming our sovereign ratings on Botswana at 'A-/A-2'.
The stable outlook reflects our opinion that Botswana will continue to
record fiscal and current account surpluses, with intermittent and
generally brief exceptions when diamond prices and custom union revenues
LONDON (Standard & Poor's) July 23, 2012--Standard & Poor's Ratings Services
affirmed its 'A-' long-term and 'A-2' short-term sovereign credit ratings on
the Republic of Botswana. The outlook is stable. Our transfer and
convertibility (T&C) assessment for Botswana remains 'A+'.
The ratings are supported by Botswana's strong government balance sheet,
well-managed minerals-based economy, and long record of political stability.
The ratings are constrained by the country's narrow economic base, which
relies heavily on the diamond sector and is vulnerable to shocks, despite
efforts to diversify. Fiscal and inflation challenges and still-significant
development needs are further rating constraints.
Botswana's stable politics, track record of prudent economic policies, and
high transparency are strong by emerging market standards. However, the
country's narrow economy, incomes that are among the lowest in the 'A'
category, high unemployment, and a high incidence of HIV/AIDS are key credit
Botswana is one of the world's largest diamond producers, and the diamond
industry remains the country's economic locomotive. It is the biggest
generators of foreign exchange earnings and government revenues. Abundant,
well-managed diamond resources and a social-democratic-style welfare state
have helped Botswana become a middle-income country with GDP per capita of
about $8,800 in 2011 from one of the world's poorest countries in the 1960s.
The stable outlook balances the economic challenges that the government of
Botswana faces against still strong government and external balance sheets. We
think these balance sheets will be maintained as Botswana continues to record
fiscal and current account surpluses, with only intermittent and generally
brief exceptions when diamond prices and customs union revenues are low.
We could lower the long-term rating if fiscal or external slippage
significantly diminishes asset buffers. A collapse in global diamond prices or
demand would likely be the cause.
We could raise the long-term rating if Botswana's creditworthiness improved,
which would likely follow if structural reforms are implemented more quickly,
inflation is brought into line with that of peers, dependence on mining
declines, and private sector development broadens. However, we do not expect
sufficient progress on these factors to result in an upgrade over the next few
|Full company name||Botswana|
|Country of risk||Botswana|
|Country of registration||Botswana|