Gov't, OPEC sign P1.2b loan
Pauline Dikuelo | Tuesday January 31, 2023 06:00
The $100 million (about P1.2 billion) loan is meant to support the government’s efforts through the strengthening of its pandemic and crisis response, addressing the regulatory constraints for private sector recovery as well as building the foundations for a sustainable green economy.
Speaking at signing ceremony, the Minister of Finance, Peggy Serame said the country is experiencing budgetary shortfalls that need to be financed largely through borrowing, hence the need of the funding from the OPEC.
She said the situation was caused by the sharp decline in economic activity associated with lockdowns and other restrictions in response to the COVID-19 pandemic. “Previously, these budget deficits were financed by drawing down on fiscal savings that had been accumulated over the years, which are no longer available as an option,” the minister said.
Serame further assured that the proceeds of the loan will be channelled towards the intended purpose just like the preceding loans.
To date, the OPEC Fund has provided financial assistance of up to $91.6 million, which was used to finance a number of development projects locally which includes the Mahalapye-Serule road project to the tune of $1 million, Middlepits-Bokspits road project for $7.87 million, the SSKIA upgrading and expansion project for $20.59 million and the recent Botswana Integrated Transport project, which was funded for $40 million. “Botswana has had a fulfilling relationship with the OPEC Fund for International Development since 1977,” she added.
Serame said the loan was sourced at the lowest possible cost, consistent with an acceptable degree of risk adding that the OPEC has provided the country with favourable borrowing terms over the years including the new loan.
For his part, the OPEC Fund director General, Dr Abdulhamid Alkhalifa appreciated that the OPEC Fund is part of the recovery strategy of Botswana noting that it is important to see the country succeed and achieve its goals. “We will be looking forward to work with Botswana in future financing needs and we are currently in talks with other government departments and will be engaging the private sector,” he said.