27 Feb 2022

Parliament has been informed that as at December 31, 2021, the country’s foreign exchange reserves stood at P56 billion.

Minister of Finance and Economic Development, Ms Peggy Serame said this when answering a question from Selebi Phikwe West legislator, Mr Dithapelo Keorapetse.

Ms Serame explained that foreign exchange reserves were being used by government, private sector and individuals to acquire goods and services in external markets.

She said as at December 31, 2017, the country’s foreign reserves amounted to P73.7 billion. 

Ms Serame said the reserves declined due to withdrawals, adding that in 2018, P7.1 billion was withdrawn, P14.5 billion in 2019, P22.2 billion in 2020 and a further P10.6 billion was withdrawn in 2021.

She said the withdrawals meant that the amount paid for imports of goods and services in foreign currency as well as investments abroad made by residents of Botswana exceeded the amount of foreign currency receipts or export earnings and inward investments by non-residents. 

The minister further explained that changes in the level of foreign exchange reserves resulted from surpluses or deficits on the balance of payments, which in turn were driven mainly by the level of foreign trade.

In a nutshell, foreign exchange reserves are assets or funds held by central banks used to finance international transactions, which include payments for goods and services, outward investments and servicing of external obligations on behalf of government, businesses and households. 

They are not solely for the use of government, she said. 

She said availability of foreign exchange reserves enabled government to purchase COVID-19 vaccines and other supplies at a time when diamond and tourism receipts had virtually dried up.

MP Keorapetse had asked the minister to state the value of foreign exchange reserves the country held in December 2017.

He wanted to know the amount that had been withdrawn since April 2018 and further asked the minister to state productive economic activities that had been funded through the reserves. ends