Botswana�s new fund for future generations :: Mmegi Online

The amount that will be saved, based on 2014 revenues, would be about P5.3 billion in that year and will increase as diamond prices rise in pula terms and so by 2026 when government revenues from diamond mining fall off, could create a fund for future generations worth approximately P120 billion, depending on the drawdown rules and rates of return.

They say that the best kept secrets are always in plain sight, especially for those who look, but never read. So it is with the most profound change in Botswana’s economic policy for decades. No-one really noticed or perhaps didn’t even read what was contained in the Ministry of Finance and Development Planning Budget Strategy document.

The strategy paper in paragraph 26 said that Botswana would set aside and save 40% of mining revenue for future generations. The IMF has long been pushing for precisely this sort of policy for a number of years to help Botswana prepare for a post –diamond future and every once in a while the IMF, despite its best efforts, actually gets it right. Of course if you actually believe that the next generation of Batswana , which will have no diamonds, will be richer than the present generation then the IMF advice is clearly wrong. But this is certainly one of those cases where the Fund has got it right.

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