Ratings agency Moody’s Investor Service has, in a recent update, reaffirmed Botswana’s sovereign credit rating as A2 for both foreign and domestic bonds and the stable outlook for the year, according to a release issued by the Bank of Botswana.

Expected growth in diamond output, progress in enhancing diamond value addition and development of the services sector are among the positive indicators listed by the agency for the rating. These are in addition to the country’s strong fiscal position, with low debt burden, a sizeable sovereign wealth fund, strong institutions and well-designed macroeconomic frameworks, as well as stable political environment, the statement noted. The stable outlook is premised on prospects for continued fiscal prudence and achievement of a balanced budget in the medium term, it added.

Moody’s has also noted the possibility of two scenarios emerging in the near to medium term. On the one hand, there is a possibility of a medium term upward revision of the ratings if progress is made in diamond beneficiation, economic diversification, and the implementation of efficiency-enhancing public sector reforms as well as private sector development leading to a marked reduction in unemployment.

On the other hand, Moody’s notes that in the near term, a substantial depletion of fiscal reserves and/or a rapid increase in public debt could lead to a downgrade. In the medium term, slow progress in the implementation of structural reforms and limited economic diversification would undermine the fiscal position and put downward pressure on the rating.