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Washington Consensus Essay

2315 words - 10 pages

BOTSWANA AND THE WASHINGTON CONSENSUS
HAVE THE RECOMMENDED POLICIES OF THE WASHIGNTON CONSENSUS BEEN IMPLEMENTED IN BOTSWANA? WHAT RES (Harvey C, 1996) (Botswana, 1966)ULTS HAVE BEEN ACHIEVED WHERE THE RECOMMENDED POLICIES HAVE BEEN IMPLEMENTED AND OR NON-IMPLEMENTED?
INTRODUCTION
The term “Washington Consensus” was the brain child of the English economist John Williamson. According to Williamson, the term referred to a set of ten specific economic policy prescriptions that he considered to represent the standard reform package promoted for developing countries, especially the Latin America by Washington based institutions such as the IMF and the World Bank. (Williamson, 2002). The ...view middle of the document...

It is against this background that this research paper is being undertaken. The paper will specifically focus on the top five policy recommendation of the Washington consensus being: Fiscal discipline, Redirection of public expenditure, tax reform, financial liberalization and competitive exchange rates. The aim is to find out whether these policies have been implemented in Botswana and the extent to which they have been implemented. Furthermore to find out what have been the consequence of their implementation and or non- implementation.

FISCAL DISCIPLINE
The first policy prescription in Washington consensus was Fiscal discipline. Washington believes in Fiscal discipline and it describes it as: low government borrowing and avoidance of large fiscal deficit relative to GDP. According to this policy, short run deficits and surpluses should be welcomed insofar as they contribute to macroeconomic stabilization.
One would not be at fault to proclaim that the policy of fiscal discipline have been long instigated in Botswana even before the Washington consensus came in to existence. (Leith, 2005) Note that when it comes to fiscal and monetary policies, the government of Botswana has always been disciplined and fiscally responsible. According to Leith, the government created shock absorbers between itself and the rest of the economy during the 1970s and 1980s in response to shocks on Agriculture and mineral revenues which fluctuated around 5% and 10% of GDP annually. It did this by smoothening expenditure whereby the government expenditure was let to grow at a slower rate than revenues. This resulted in the government running budget surplus during favorable shock to revenue and drawing on these surpluses during negative shocks to revenue. Most recently, in his state of the nation address, the President of Botswana indicated that, in terms of fiscal management, government succeeded in restoring a balanced budget during 2012/13 financial year after four years of budget deficit and it is currently running a budget surplus. Government’s fiscal discipline meant that, it was able to provide macroeconomic stability which is crucial to private sector investment and growth. It has been able to achieve its inflation target of 3 to 6% which currently stands at 4.5 %. It is safe to conclude that in terms of fiscal management Botswana has always been consistent with the Williamson’s Washington consensus.
REDIRECTION OF PUBLIC EXPENDITURE
The second policy reform involved redirecting public expenditure towards provision of key pro-growth, pro-poor services like primary education, primary health and infrastructure development.
Education has been a key development priority for Botswana since independence. The first president, the late Sir Seretse Khama uttered the following words in a speech given at Uppsala, Sweden on 11 November 1970, “most important of all the colonial government failed to recognize the need to educate and train our people so that they...

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