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IS EXTERNAL DEBT A THREAT TO BOTSWANA’S ECONOMIC GROWTH? AN EMPIRICAL ENQUIRY
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Botswana’s external debt has been growing during the last few years, though at a moderate level and well within sustainable limits. But in the context of declining share of the mining sector in GDP, insignificant degree of diversification in Botswana

Research Group
 Micro Economics

Date
  06th July 2017

Author
 Goitseone Modisaemang; Nettimi Narayana; Sukumaran Nair

Keywords
  Economic Diversification; Economic Growth; External Debt; Exchange Rate; Terms of Trade

statement

Botswana’s external debt has been growing during the last few years, though at a
moderate level and well within sustainable limits. But in the context of declining share
of the mining sector in GDP, insignificant degree of diversification in Botswana
economy and a possible second wave of recession in advanced countries, external
debt of Botswana may pose a challenge to the economy. In order to examine this
hypothesis, the determinants of debt burden were established as economic growth,
terms of trade, real exchange rate. In terms of all these, if current trend is an indicator,
Botswana’s performance is likely to be sluggish in coming years. If this trend continues,
external debt may well be a threat to the economy of the country and hence appropriate
policy measure may have to be put in place.

International Journal of Economic Issues; (2015) Vol. 8, No,15-23


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