Fiscal rules—permanent quantitative constraints on government finances—are an important tool to help mitigate the macroeconomic challenges associated with managing natural resource revenues. This paper sheds light on large gaps in compliance and oversight of fiscal rules, and provides policy recommendations on how fiscal rules can be further strengthened.
This case study discusses the diversification of Botswana’s economy away from mineral extraction. Revenues from the country’s vast diamond reserves are expected to decline rapidly in the 2020s, and while the government has pursued efforts to minimize resource dependence, results have been mixed. The study concludes with lessons learnt for other countries pursuing effective resource governance.