Botswana: Rising inflation by 2011

The IMF reported Monday 14th June that the country could experience a temporary rise in inflation, while declining mineral and custom receipts might put a squeeze on government revenues.

The IMF said that increases in the value added tax and electricity tariffs were expected to feed through to inflation, before easing back within the Bank of Botswana’s 3% to 6% target range during the course of 2011.

The government raised the VAT to 12 % from 10% in April to address a budget deficit after revenue plunged in the wake of the global financial crisis.

The consumer inflation rate rose 7.1% in April – an increase of 6 % since March 2010.

The IMF said, ‘With recovery now under way, fiscal policy is being appropriately redirected away from short-term demand management towards medium-term considerations.’

It also noted, that the outlook for government revenues was set to become more constrained, reflecting a decline in mineral revenues and customs.

‘The government’s intention to balance the budget by 2012/13 is ambitious but warranted in order to put the public finances back onto a sustainable footing,’ said the IMF.

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