07 Dec 2022

Following a lengthy debate that extended into Tuesday night, Parliament finally acceded to the Minister of Finance’s request to raise a loan from the Organisation of the Petroleum Exporting Countries (OPEC) Fund for International Development for the purpose of budget support for economic resilience and green recovery programme. The purpose of the Bill as presented by Minister Peggy Serame is to authorise the raising of a loan by government not exceeding P1.291 billion from the OPEC Fund.

Minister Serame said the overall objective of the programme was to support government’s efforts to improve fiscal efficiency and sustainability, support private sector-led industrial development and also economic and social inclusion post-COVID-19 pandemic.

“These would be done through the following, strengthening its pandemic and crises response, addressing the regulatory constraints for private sector recovery and building foundations for sustainable, green economy,” she said.

Ms Serame said despite improvement in revenue and general macro-economic performance in 2021 which saw the country’s GDP growth recovering to 11.4 per cent and expected to moderate at 4.2 per cent in 2022, there was still a noteworthy budget financing challenge as government continued to roll out various growth enhancing economic transformation and social reforms as well as supportive macroeconomic policies.

She said these included attempts to boost future growth prospects and most importantly maintain social nets. She said as a result of economic challenges such as the effects of COVID-19 and the Ukraine and Russia impasse, government revenues and expenditures experienced budget deficits which needed to be financed by borrowing.

She said this was in the context where previous budget deficits had been largely financed by drawing down on savings that had been accumulated over the years and were no longer available to finance spending.

“You will recall that in the 2022 Budget Speech I had indicated that the projected budget deficit of P6.98 billion for the financial year 2022/23 will be financed through a combination of issuance of domestic government securities and external borrowing, hence my presentation of loan authorisation bills during the financial year 2022/23,” she added.

She said the ministry approached the OPEC fund for a budget support loan amounting to over P1 291 billion to finance part of the projected budget deficit.

Ms Serame noted that in terms of Botswana’s debt legislation the requested loan would still leave the country’s external debt exposure within the statutory limits of 20 per cent of GDP.

“Currently external debt to GDP stands at 11.66 per cent while domestic debt is at 9.81 per cent of GDP altogether within the 40 per cent of GDP statutory limit,” she added. ends