16 Sep 2020

Several legislators have thrown their weight behind a request to increase authorisation of bond issuance programme from a P15 bilion limit to P30 billion.

When debating a motion for authorisation of increase of the bond issuance programme, chairperson of Finance and Estimates Committee, Mr Thapelo Letsholo, told Parliament that magnitude of the COVID-19 pandemic was also weighed heavy on resources.

He said as resources became constrained, it was advisable to be financially prudent and ensure that more was achieved with less.

He stated that the Finance and Estimates Committee was of the view that while there was need for increase in borrowing, there was uncertainty on how soon the economy would recover, which might impact the ability to payback and consequently resulting in adverse credit ratings and reduced ability to raise finance internationally.

Furthermore, he said the committee maintained that there was need to model how the economy would perform under different scenarios relating to how long COVID-19 remained prevalent.

“This would allow government and the central bank to think through the potential solutions and design mitigations for the negative economic impact,” he stated.

Furthermore, Mr Letsholo said the committee also noted the adherence to the limits set for government debt as provided for within the Stock Bonds and Treasury Bills Act.

He commended government for looking into sustainable ways to maintain a reduced government debt, avoiding a deficit to safeguard the developmental needs of future generations.

“This should accordingly be complemented in that regard, by effective delivery and a national budget that yields more for the economy. We cannot understate the world’s experience from the global financial crisis of 2007-2009, that it was governments through taxpayer’s money that rescued banks and corporates,” he stated.

In that regard, he said it was, therefore imperative that financial prudence was maintained by government.

Minister of Investment, Trade and Industry, Ms Peggy Serame commended government for such a measure, which she said aimed at reducing government debt.

She also stated that through bond issuance increase, the capital market would improve and develop further.

“As a country, we have always borrowed money outside and this is the time to afford Batswana an opportunity and also look at other revenue streams such as pension funds,” she stated.

Leader of Opposition, Mr Dumelang Saleshando, also supported the motion, but stated that he was worried that institutional investors tended to benefit more than ordinary citizens.

He was of the view that education was still lacking on empowering Batswana about such investments, adding that Batswana had low propensity to save and as such it was about time they became knowledgeable.

Mr Saleshando also questioned as to how much government had done to encourage public private partnerships since they were generally low, adding that this would be the time to turn to those for some major government projects to reduce borrowing money outside.

Furthermore, he called for financial prudence and stated that corruption should be shunned at all costs in the midst of constrained resources.ENDS