10 Aug 2023

Minister of Finance has tabled a bill requesting a P2 billion loan from the International Bank for Reconstruction and Development (IBRD) to support the country’s budget deficit.

Ms Peggy Serame’s proposal is contained in the Botswana programmatic economic resilience and green recovery programme A1 International Bank for Reconstruction and Development (IBRD) phase II (Loan Authorisation) Bill of 2023.

The bill seeks to authorise government to raise a loan from IBRD for the purpose of budget support for the economic resilience and green recovery programme.

Tabling the bill, Ms Serame said the global economy continued to face a number of shocks which have had adverse implications on various economic jurisdictions, including Botswana.

She said it included the negative lingering effects of the COVID-19 pandemic, the Russia-Ukraine conflict and other emerging challenges such as climate change risks which had culminated in the disruption of global supply chains, the increase in commodity prices and elevated inflation.

Minister Serame noted that the global economic growth had been revised downward in 2023 and that the world economic growth was estimated to slow down to 2.8 per cent in 2023. 

She added that a slower growth rate was projected for growing economies and emerging markets as well as sub-Saharan Africa.

She said the Southern African Customs Union (SACU) region growth rate was projected to decelerate to 0.4 per cent in 2023 from 2.3 per cent in the previous year.

Ms Serame said the slow growth was due to a weak economic outlook for the South African economy due to various factors such as the ongoing power supply constraints and the grey listing by the Financial Task Force in February this year.

She said the scenario posed a potential risk to the domestic economy and that government was ready to implement mitigating factors, including a more reliable power supply domestically in order to guard against limited supply from external sources.

Regarding the local economy, the minister said economic growth reached 5.8 per cent in 2022 from 11.9 per cent in 2021, and that it was expected to slow to four per cent in 2023 on account of the weak demand for rough diamonds.

She said the non-mining sector was expected to continue to play a key role in driving the domestic economy in 2023.

She also said government had introduced reforms and that there was an increase of 27.88 per cent in the development budget during financial year 2023/24, adding that it was a testament to the reforms. However, she said, a budget deficit of P7.59 billion was projected for the financial year 2023/24 and that it would be financed through a combination of domestic and external borrowing.

Ms Serame said the Botswana programmatic economic resilience and green recovery programme aimed to support government response to multiple shocks and strengthening private sector development as well as promoting resilient low carbon recovery.

She noted that the loan period was 10 years, inclusive of a grace period of three years.

During comments, Francistown South MP, Mr Wynter Mmolotsi, said the country should make efforts to grow the local economy to enable it to repay the loans. While Molepolole South MP, Mr Kabo Morwaeng, said the country had a history of good management of resources and responsible spending. He said the ruling Botswana Democratic Party had been core to managing the economy well and that it had attracted international recognition. 

He further described his party as addicts to the rule of law.

The bill debate continues before Parliament.  Ends