Moody�s reaffirms Botswana�s sovereign credit rating

Isaac Pinielo | Friday December 12, 2014 13:11

 

However, the rating agency notes that the economy’s heavy reliance on the diamond industry and the relatively slow pace of economic diversification remain key weaknesses for the rating over the long term.

In making the assessment, the agency emphasises the country’s sound policy framework, effectiveness of government and a track record of prudent fiscal policies, which result in continued strengthening of the government’s net financial position.

“The effective fiscal consolidation in the aftermath of the global financial crisis resulted in the government debt remaining at a low level, while fiscal surpluses can be expected to continue,” the report says.

The assessment further acknowledges that, in 2014, consumer price inflation remained within the Bank of Botswana’s medium-term objective range of three to six percent, while the crawling band exchange rate policy continued to support monetary stability and economic diversification.

As in previous years, Moody’s notes that, given the healthy financial position and the stable political and financial environment, the risks that could put renewed pressure on the ratings are considered low.

The agency has reaffirmed the country’s 2014 sovereign credit rating of A2 for both foreign and domestic bonds and the stable outlook for the year.

The rating is based on the assessment that weighs the government’s relatively strong balance sheet, net external creditor position and low public debt, against potential challenges associated with the middle-income status and a relatively small economy.