Estimates for 2012 indicate a current account deficit of P5.3 billion compared to the smaller revised figure of P251 million in 2011 largely driven by the widening merchandise trade deficit. A country incurs a current account deficit when its total imports of goods, services and transfers is greater than its total exports. The merchandise trade deficit was P15.9 billion in 2012, up from the revised deficit of P5 billion in 2011, representing the fifth year of rolling deficits.
However significantly higher receipts from SACU helped lower the current account deficit as net current transfers increased to a surplus of P12.7 billion in 2012 from P7.5 billion in 2011.In the 2012 Annual Report, BoB says higher exports of goods and services are likely to cut the country's current account deficit on improved demand from international markets as global economy recovers."Additional value added associated with diamond aggregation and sales activities moving to Botswana will also boost service exports, although additional imports of services can also be expected in the short-term. However, the continued dependence on a narrow export base, albeit supplying increasingly diverse markets, makes the economy vulnerable to any renewed economic downturn.Moreover, net outflows are likely to increase in the short term because of the expected lower SACU revenues and higher cost of fuel," says the report.
