The Auditor General has raised concerns about the government’s borrowing practices, highlighting a significant rise in total outstanding debt for the fiscal year 2021/22. This increase is attributed to both external and domestic borrowings.
In his report on Botswana’s Annual Statements of Accounts for the year ending March 2022, Accountant General Kealeboga Molelowatladi noted a substantial 20 percent increase in total gross debt outstanding, which reached P40.93 billion. This marked a notable rise from the previous financial year.
Molelowatladi detailed that external debt, including guarantees, stood at P23 billion, reflecting a 14 percent increase from the previous year. This surge was driven by two major budget support loans: a USD 250 million loan from the World Bank Group (International Bank for Reconstruction and Development, IBRD) and USD 137 million from the African Development Bank (AfDB). These loans were essential for supporting the government’s post-COVID-19 economic recovery program.
Domestic debt, including guarantees, also rose to P25.31 billion, a 14 percent increase compared to March 2021. This was primarily due to the expansion of the P30 billion Note Issuance Program, which saw the frequency of government security auctions increase from quarterly to monthly. The program’s upper limit was raised from P15 billion in 2020 to address limitations identified in the domestic bond market review of 2019.
As of the end of the fiscal year 2021/22, the Total Debt-to-Gross Domestic Product (GDP) ratio stood at 22.3 percent. The external debt to GDP was 10.6 percent, while domestic debt accounted for 11.7 percent of GDP.
Finance Minister Peggy Serame has assured Parliament that she will continue to manage the public debt portfolio prudently, in line with legislation. She requested an increase in the government bond issuance ceiling from P30 billion to P55 billion, a proposal approved by Parliament.
Serame explained that the increase would keep the country’s public debt exposure within the statutory limit of 40 percent of GDP. Currently, total public debt, including guarantees, is 20.59 percent of GDP, comprising external debt at 9.54 percent and domestic debt at 11.05 percent. However, she acknowledged risks associated with the bond ceiling increase, such as interest rate, refinancing, and inflation risks.
