Africa > Botswana

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Karim Barhoumi, Seung Mo Choi, Tara Iyer, Jiakun Li, Franck Ouattara, Mr. Andrew J Tiffin, and Jiaxiong Yao
The COVID-19 crisis has had a tremendous economic impact for all countries. Yet, assessing the full impact of the crisis has been frequently hampered by the delayed publication of official GDP statistics in several emerging market and developing economies. This paper outlines a machine-learning framework that helps track economic activity in real time for these economies. As illustrative examples, the framework is applied to selected sub-Saharan African economies. The framework is able to provide timely information on economic activity more swiftly than official statistics.
Mr. Johannes Herderschee and Ms. Luisa Zanforlin
Whereas most of the literature related to the so-called “resource curse” tends to emphasize on institutional factors and public policies, in this research we focus on the role of the financial sector, which has been surprisingly overlooked. We find that countries that have financial systems with more depth, as well as those that actively manage their central banks’ balance sheets experience less exchange-rate appreciation than countries that do not. We analyze the relationship between these two findings and suggest that they appear to follow separate mechanisms.
Francisco Arizala, Mr. Jesus R Gonzalez-Garcia, Mr. Charalambos G Tsangarides, and Mustafa Yenice
This paper examines the growth performance of sub-Saharan African countries since 1960 through the lens of growth turning points (accelerations and decelerations) and periods of sustained growth (growth spells). Growth accelerations are generally associated with improved external conditions, increased investment and trade openness, declines in inflation, better fiscal balances, and improvements in the institutional environment. Transitioning from growth accelerations to growth spells often requires additional efforts beyond what is needed to trigger an acceleration. Growth spells are sustained by fiscal policy that prevents excessive public debt accumulation, monetary policy geared toward low inflation, outward-oriented trade policies, and structural policies that reduce market distortions, as well as supportive external environment and improvements in democratic institutions. Overall, determinants of growth spells in sub-Saharan Africa are different from those in the rest of the emerging and developing countries.
Mr. Jorge I Canales Kriljenko, Ms. Farayi Gwenhamo, and Mr. Saji Thomas
Spillovers from South Africa into the other members of the Souther Africa Customs Union (known as the BLNS for Botstwana, Lesotho, Namibia, and Swaziland) are substantial reflecting sizeable real and financial interlinkages. However, shocks to real GDP growth in South Africa do not seem to systematically affect growth developments in BLNS countries as a group. Nevertheless, vector autoregressions, which allow country-specific parameters, suggest some strong spillovers onto the smaller economies.
Mr. Amadou N Sy, Mr. Rabah Arezki, and Thorvaldur Gylfason


Countries with an abundance of natural resources, many of which are in sub-Saharan Africa, often show a record of relatively poor economic performance compared with non-resource-rich countries. The chapters in this volume explore the potential challenges to countries with abundant natural resources and ways to manage these challenges so as to reap the benefits of resource wealth while avoiding the pitfalls. The book is divided into five sections, which explore commodity markets and the macroeconomy, economic diversification and the role of finance, fiscal policy, exchange rates and financial stability, and governance. The ideas in this book were first presented at a seminar in November 2010 that was aimed primarily at policymakers in sub-Saharan Africa and brought together ministers, central bank governors, other senior policymakers, and well-known academics.

Ethan Ilzetzki, Mr. Enrique G. Mendoza, and Mr. Carlos A. Végh Gramont
We contribute to the intense debate on the real effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fisscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are lower than in closed economies and (iv) fiscal multipliers in high-debt countries are also zero.
International Monetary Fund


This paper surveys the foreign exchange markets, money and secondary government security markets, and stock exchanges in 107 smaller economy countries. The underdevelopment of these markets impedes risk transfer, monetary policy, corporate financing, and the capacity to absorb capital inflows. This study marks a first step toward formulating policies to develop essential smaller economy financial markets by documenting the stylized facts and presenting a framework for assessing the policy issues.

Patrick A. Imam
We describe unique aspects of microstates-they are less diversified, suffer from lumpiness of investment, they are geographically at the periphery and prone to natural disasters, and have less access to capital markets-that may make the current account more vulnerable, penalizing exports and making imports dearer. After reviewing the "old" and "new" view on current account deficits, we attempt to identify policies to help reduce the current account. Probit regressions suggest that microstates are more likely to have large current account adjustments if (i) they are already running large current account deficits; (ii) they run budget surpluses; (iii) the terms of trade improve; (iv) they are less open; and (v) GDP growth declines. Monetary policy, financial development, per capita GDP, and the de jure exchange rate classification matter less. However, changes in the real effective exchange rate do not help drive reductions in the current account deficit in microstates. We explore reasons for this and provide policy implications.