48622

                     BOTSWANA: COUNTRY PARTNERSHIP STRATEGY

                           CHAIRMAN'S CONCLUDING REMARKS

                                  Meeting of Executive Directors
                                            May 21,2009



      Executive Directors welcomed the first World Bank Group Country Partnership Strategy
(CPS) with Botswana and commended the renewed lending engagement with the country after a
long hiatus.

      Directors commended Botswana for its impressive achievements in macroeconomic
management, fiscal discipline and sustained growth. They noted, however, that serious
challenges remain. In the short term, Directors agreed that Botswana must mitigate the impact of
the global economic crisis and address electricity insecurity in a sustainable manner. The decline
in diamond revenue exports, coupled with weak revenues from copper-nickel and tourism, has
led to a further contraction in projected growth rates and to high levels of current account and
fiscal deficits. They noted that while Botswana is in a better position than most Sub-Saharan
African countries to weather the crisis given its sizeable fiscal reserves, they suggested that
realigning budget and policy priorities to increase the effectiveness of public sector expenditures
would be needed to safeguard gains already made.

      For the medium to longer term, Directors underscored the importance of economic
diversification and the effective use of all resources, both non-renewable and renewable, to
increase economic growth and promote job creation. In this regard, it was noted that a
competitive and attractive investment climate coupled with private sector development, and
infrastructure capacity would be needed. The need to consider social vulnerabilities, including
gender, education, unemployment, inequality, combating the HIVIAIDS pandemic and
distributional issues was highlighted.

      Directors broadly supported the CPS and its four pillars as a flexible strategic framework
for the Bank Group's re-engagement in Botswana. They noted the benchmarks under which the
Bank Group could become engaged in the coal-to-power electricity sector and requested that
Bank support be consistent with all Bank policies and strategies, including the use of best
available technologies. In support of Botswana's competitiveness agenda, Directors welcomed
the proposed interventions by IFC and MIGA through public-private partnerships in the
education and telecom sectors, and possible engagement in the electricity sector. They
highlighted the need to further consider capacity building issues and monitoring mechanisms.
The significance of Botswana to the sub-continent as a potential regional transport hub and
energy exporter, and its pivotal role in the fight against HIVIAIDS given the country's location in
the epicenter of the pandemic was highlighted. In addition, they encouraged South-South
collaboration including in knowledge sharing and development initiatives.

        Finally, Directors underscored the importance of close coordination within the Bank
Group and with donor partners to successfully implement the CPS. The.opening of a country
office in Gaborone would facilitate effective and efficient delivery of the CPS program.