17 Jul 2013

Minister of Finance and Development Planning, Mr Kenneth Matambo has told Parliament that foreign reserves at the end of May amounted to P66.4 billion, equivalent to 16 months of imports.

Mr Matambo said the number of months of import cover had fallen significantly from 29 months in 2006 due to substantial growth in the country’s annual import bill.

He added that the three to six months of import cover was not prescriptive as Botswana had decided to hold higher reserves influenced by the country’s vulnerability to exogenous developments and the desire to preserve some of the earnings derived from the exploitation of diamonds for future generations.

Again, he explained that Botswana was a relatively undiversified primary commodity exporter where earnings were largely dependent on the performance of external markets adding the country was also susceptible to periods of sustained drought and animal diseases.

The finance minister also said they have partitioned the reserves into two sub-portfolios, the Pula Fund and the Liquidity Portfolio.

Mr Matambo was responding to a question from Maun West MP, Mr Tawana Moremi who wanted the minister to state the number of months of import cover for Botswana’s foreign exchange reserves and whether the standard acceptable level internationally is six months. ENDS