Monday, December 11, 2023

Botswana’s public debt could rise up to P56 billion

The size of the government’s debt relative to the economy or debt-to-Gross Domestic Product (GDP) ratio continues to grow, albeit still below the statutory ceiling threshold, data from the Bank of Botswana annual report shows.

The central bank data shows that as at the end of March 2022, the country’s debt-to-GDP ratio increased from 24.2 percent registered in December 2021 to 25 percent. In monetary terms, this means as at March 2022, government and government-guaranteed debt is projected to have reached P49.8 billion from P41.5 billion recorded by the last quarter of 2021. Bank of Botswana says of the P49.8 billion total debt, P42 billion is Government’s own debt, while the balance is government-guarantees.

A further breakdown of the debt figures shows that the country’s total external debt reached P22.6 billion or 11.3 percent of GDP, while domestic debt (P27.2 billion), accounts for 13.6 percent of GDP.

Debt-to-GDP ratio on the rise….

With the government having been on a loan shopping spree lately both in local and external debt markets, it is anticipated that the public debt will keep growing before it goes down. The appetite to acquire more debt was first signaled in late 2020 when Parliament approved a P15 billion extension in the government bond programme. At the same time, external funding options have also been explored mostly from the development funding institutions (DFI’s).

Publicly available information shows that Botswana’s public debt has been on the rise having started 2020 with a P30.4 billion debt before ending that year with P38.6 billion in loans. By early 2021 the tiny southern African nation approached and successfully obtained a P2.7 billion loan from the World Bank before making another knock at the African Development Bank (AFDB) Group this time around securing US$137 million a few months later.

With signals that the government is in desperate need for funds that will accelerate its key economic reforms and support the implementation of the country’s Economic Recovery and Transformation Plan (ERTP), the central bank projects a further upward movement in the public debt. For the financial year 2021/22 the total debt is expected to reach 49.8 billion or 25 percent of GDP and subsequently go up to P56.8 billion or 26.1 percent of GDP during the 2022/23 financial year.


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