IMF urges Botswana to raise borrowing limits
Lewanika Timothy | Monday December 15, 2025 06:00
The IMF however also emphasised the need to keep an eye on spiralling debt, with government's debt pile having grown from P48 billion in 2021 to an estimated P74 billion at the last count. The major factors have been the rolling budget deficits dating back to 2016–2017, COVID-19 and the more recent diamond downturn.
The IMF, which recently published the findings of its annual economic bilateral engagement with the government, known as the Article IV mission, recommended the expansion of borrowing limits for the country, as the country’s financing needs continue to outstrip capital supply through conventional revenue channels.
At present, the public debt ceiling is set at 40% of GDP under the Stock, Bonds and Treasury Bills Act of 2005. Of the 40% of GDP limit, 20% is limited to local borrowing through government issuance of bonds and treasury bills, whilst 20% is reserved for external financing through borrowing from international organisations or institutions.
The IMF researchers believe that increased borrowing limits will provide government with short-term relief to finance its needs and consolidate its fiscal position.
'Given the strong public recognition of the ceiling as a fiscal anchor, staff recommended retaining it but increasing its level to 50% of GDP to provide adequate room for a gradual fiscal consolidation whilst maintaining sufficient fiscal space to respond to adverse shocks,' researchers stated.
The continued issuance of bonds, and T-bills in the past years has pushed government’s debt pile near its limit for domestic borrowing. At the last count, domestic borrowing was at P42.6 billion or about 18.7% of GDP, just under the 20% ceiling. The numbers confirm the limited room for financing as raised by the IMF.
Ordinarily government would dip into its rainy-day accounts banked at the central bank, but public finances have been battered by the prolonged downturn in diamonds, with the Government Investment Account (GIA) almost totally depleted by the end of June, falling from P7.0 billion to P0.5 billion during the quarter.
Despite calling for a debt limit expansion, the IMF warned against unsustainable borrowing that may lead to the country becoming debt-stressed. The IMF projections showed that the country could hit a 60% debt-to-GDP ratio by 2030, 'ceteris paribus' (holding all things constant).
“Under the baseline scenario, whilst a partial recovery of mineral revenue would contribute to a decline of the fiscal and current account deficits over the medium term, public debt would increase substantially, to near 60% of GDP by 2030, whilst international reserves would be gradually depleted over the medium term,” researchers warned.