2010年-世界发展银行全球_Diamonds_Are_Not_Forever___Botswana_Medium-term_Fiscal_Sustainability_42页_1mb

Summary of Botswana Medium-term Fiscal Sustainability

Core Content

This working paper analyzes Botswana's medium-term fiscal sustainability in light of the expected depletion of diamond reserves. It highlights the risks of relying heavily on diamond revenues for public finances and outlines necessary policy adjustments to ensure long-term stability and development.

Main Points

• Economic Growth and Dependency on Diamonds: Botswana has experienced impressive economic growth since independence in 1966, with an average annual real growth rate of 9% and per capita GDP rising from $250 in 1960 to $4,800 in 2008. However, this growth has been largely driven by diamond exports, which have accounted for 70% of total merchandise exports and nearly half of fiscal revenue.

• Diamond Revenue Trends: Diamond production is expected to remain high for another decade, but declining prices and rising extraction costs are reducing the profitability of the sector. Mineral revenue, which comprises the government's share of diamond profits, has been declining as a percentage of GDP since the late 1980s, with a sharp drop in 2008/09 due to the global economic crisis.

• Fiscal Structure and Vulnerability: Government revenue is heavily dependent on diamonds, with only about 30% of total revenue coming from non-mineral and non-SACU sources. The government sector accounts for 15% of GDP and employs 40% of the formal labor force. The fiscal structure is vulnerable to external shocks, as seen during the 1994/95 and 2008/09 crises.

• Fiscal Rules and Performance: The government has implemented fiscal rules to manage spending and ensure sustainability. These include the Sustainable Budget Index (SBI), which limits non-education and non-health recurrent expenditure to non-mining revenue, and a 40% GDP cap on total government expenditure. However, adherence to these rules has been inconsistent, with the SBI exceeding unity in 2001/02 and again in 2008/09 due to increased spending and reduced revenue.

• Public Expenditure and Revenue Management: Public expenditure has been growing, with a significant portion attributed to the public sector wage bill and development spending. Revenue collection from non-mineral sources remains low, and the government has not fully utilized its potential. Improvements in tax compliance and collection have helped, but more is needed to enhance revenue generation.

• Non-Mining Sector Development: The non-mining sector has not developed sufficiently to offset the decline in diamond revenues. While some sectors like services show robust growth, agriculture, construction, and manufacturing remain underdeveloped due to high labor costs, skill shortages, and a small domestic market.

• Pula Fund and Fiscal Stability: The Pula Fund, established in 1993, serves as a revenue stabilization fund, with assets invested in long-term instruments overseas. It has been used to finance fiscal deficits, but its role in long-term fiscal sustainability is not clearly defined in policy terms.

• Fiscal Sustainability Challenges: The paper concludes that Botswana's current fiscal strategy is unsustainable in the long term due to the decline in diamond revenues. A more diversified economy and improved fiscal management are essential to ensure macroeconomic stability and continued development.

Key Information

• Diamonds and Revenue: Diamond sector contributes about 45-50% of total government revenue. Revenue from other minerals is negligible.
• Fiscal Rules: The SBI (≤1) and 40% GDP cap on government expenditure are key fiscal rules. The SBI was breached in 2001/02 and 2008/09.
• Fiscal Deficit: In 2008/09, Botswana faced a fiscal deficit of 5.4% of GDP, primarily due to reduced diamond exports and increased public spending.
• Global Crisis Impact: The 2008 global crisis led to a sharp decline in diamond exports and government revenue, highlighting the economy's vulnerability.
• Non-Mining Revenue: Non-mineral, non-SACU revenue accounts for only about 30% of GDP. It has not been sufficient to offset the decline in diamond revenues.
• Policy Recommendations: The paper recommends enhancing revenue collection through improved tax administration and enforcement, reducing public spending, and developing a dynamic non-mining sector to support long-term fiscal sustainability and balanced development.

Conclusion

To ensure medium-term fiscal sustainability, Botswana must diversify its economy, improve revenue collection, and enhance fiscal discipline. The paper emphasizes the importance of fiscal policy in achieving balanced development and reducing poverty and inequality.