Undistracted by the Tsunami wave that hit its shores last week, Japan says it is ready to finance new public projects if given opportunity by Botswana, but its ambition might be derailed by the country’s desire to control borrowing.
There is an opportunity that Japan International Cooperation Agency (JICA), one of the largest development agencies in the world, could take part in new projects that will increase its presence in the country.
“I think JICA is ready to do that (finance Botswana’s upcoming works),” Honzu Shigeo, JICA’s Pretoria-based representative told a seminar on Japanese Public Fund.
Japan is already involved in major projects in the country with the assistance expiring in 2015; meaning the giant Asian country needs to continue its presence in Africa where there is renewed scramble for the continent.
JICA has previously provided loans towards infrastructure projects in the transport and water sector, including the multibillion North- South Carrier Water Project in 1995.
It also financed the Morupule Power Station Expansion Project in 1986, the Railway Stock Increase Project in 1988 and Trans ÔÇô Kalahari Road Project in 1993.
The candidate projects that the Japanese are eyeing to participate in include the Trans-Kalahari Railway, the Kazungula Bridge, Zambezi Agro- Commercial Project (irrigation) and Morupule Coal Power Plant Rehabilitation.
Already, the Japanese are involved in the prefeasibility for Morupule Coal Power Plant Rehabilitation.
Shigeo said they have already made an official request to Botswana for participation in these mega projects.
The Japanese loan facility that is normally described as Official Development Assistance (ODA) comes in four forms, namely the project loans, engineering service loans, development program loans and two step loans (financial intermediary loans).
But JICA can only finance these projects if the country fails to get funding locally under its new programme to borrow in the domestic capital markets.
Botswana is running a deficit and the plan is to balance the budget by 2013. Finance minister Kenneth Matambo said during his budget that there is likelihood of breaching external debt ratio against GDP if the borrowing momentum continues.
Botswana’s terms of borrowing is guided by the Stock, Bonds and Treasury Bills Act, which limits each of internal and external Government debt and Government guarantees to 20 percent of GDP.
By the end of the 2009/10 financial year, the internal ratio stood at 6.8 percent of GDP, while the external ratio stood at 12.5 percent of GDP.
However, the minister said by the end of the current financial year, they expect the internal debt ratio to have fallen to 6.4 percent, while the external debt ratio would have risen to 19.1 percent of GDP.
Boineelo Magdalene Peter, Director Budget Analysis & Debt Management Ministry of Finance, told the seminar the financial crisis forced government to come up with a Medium Term Debt Management Strategy.
“This strategy will formally state the debt management objective, policies, plans and financing strategies for the financial year on the medium term,” Peter said.