Botswana has emerged as Africa’s safest economy as a result of South Africa’s deteriorating economic fundamentals and rising political risk, according to the latest results of Euromoney’s Country Risk survey.
Analysts participating in the ECR survey downgraded South Africas ECR risk score by 0.3 points, to 55.9 points (out of a possible 100) in August, leaving Botswana in top spot in ECRs Africa risk rankings.
South Africas score declined because of lower scores in the surveys economic outlook, monetary/currency stability and regulatory/policy environment indicators, As a result it has fallen two places in the global rankings.
With a global rank of 51, South Africa now sits one place below Botswana in the survey. Botswana benefits from higher scores in the surveys economic, political, debt and credit rating indicators than South Africa's (see graph below).
Rising revenues and strict spending controls helped reduce the Botswana governments gross debt from 14.9% of GDP in 2011 to 13.4% in 2012 and produced a fiscal surplus of 4.9% of GDP in 2012.
A recent report by Standard & Poors recognized Botswanas fiscal position as an underlying credit strength but warned that a fall in the diamond price might result in a weaker than expected current account and expose the economy to external shocks.
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