“Foreign exchange reserves arise when you export. Botswana has to work hard to earn foreign exchange reserves but we will not earn foreign exchange when we import more because the currency we use to buy these imports is denominated in US Dollar terms and we draw that from the Central Bank. This money is taken from foreign reserves,” he explained.
Recent statistics however show that the reserves are on the recovery path despite the significant erosion of over 40 percent in the past year.
The minister said on average, the country is spending about US$1.15 million (P5.175 million) worth of foreign reserves on imports, hence the depletion. He said the reserves are estimated at about US$5.4 billion (P35 million), which translates into 22 months of import cover. He also defended his government for not drawing from reserves to spend locally.
“As of necessity we must keep some aside and not exhaust all of it at once,” he said in reaction to criticism that the government has locked up huge sums of money in reserves at the expense of increasing poverty in the country.
He said the reserves are important because of the interest they earn from investments abroad.
“That money is not just lying there - it is invested there in different portfolios,” he explained.
He added that it is that interest, which is used in the national budget. He also said the country draws from reserves when exports are not functioning and during times of emergencies such as in the year 2002.
“When there was drought in 2002, we used the reserves to buy foodstuffs and sorghum from as far as Australia.”
In order to avoid the erosion of the reserves, he challenged exporters to take advantage of bilateral and multilateral relations that the country is engaged in, such as the African-Carribean and Pacific countries and the European Union (ACP-EU), South African Customs Union (SACU), Africa Growth and Opportunity Act (AGOA) and the booming tourism industry. He said he would see to it that the contribution of tourism to the Gross Domestic Product (GDP) doubles by the end of National Development Plan Nine (NDP 9).
