Gov’t seeks P3bn loan from commercial banks
Lewanika Timothy | Monday March 16, 2026 09:11
According to a recent Government Gazette notice, the country's fiscal authorities intend to secure a P3 billion facility from a consortium of local lenders comprising First National Bank Botswana (FNBB), Stanbic Bank Botswana, and Absa Bank Botswana.
The facility will require parliamentary endorsement before it can be concluded, in line with statutory requirements governing public borrowing.
“The object of the Bill is to authorise the raising by the government, of a loan of an amount not exceeding $2,166,700, from a syndication of local banks (Absa Bank Botswana Limited, First National Bank of Botswana Limited and Stanbic Bank Botswana Limited),” the bill read.
“The purpose of the loan is to finance the Botswana Government budget.”
Last year, the government rattled financial markets, departing from the bonds, treasury bills borrowing route, and securing a direct line of credit from the country’s largest pension fund. The Finance ministry was able to secure a P3 billion loan from the Botswana Public Officers Pension Fund (BPOPF), its first-ever direct financing from the pension fund, as it raced to settle outstanding supplier invoices.
The loan carries a seven-year tenure with an interest rate of 11% per annum, is inclusive of a two-year grace period, and also has a two-year moratorium on interest repayments.
Borrowing directly from commercial banks represents another notable departure from Botswana’s traditional reliance on development finance institutions or capital market instruments such as government bonds. The move signals deepening fiscal strain confronting government as traditional sources of funding come under pressure, with the recent limitation being the hitting of the 40% statutory borrowing limit.
When presenting the 2026–2027 Budget Speech, the Finance Minister estimated that the total public debt would likely end the next financial year at 44.66% of GDP, with the government now poised to seek an expansion of borrowing limits to 60% of GDP.
Botswana has historically financed budget deficits through a combination of domestic bond issuances and international loans from multilateral institutions and drawdowns from savings accumulated during periods of strong mineral revenues in the Government Investment Account (GIA).
However, the country’s fiscal buffers have been shredded thin in recent years owing to a decline in the country’s economic mainstay activity, being diamond trading, coupled with dampened economic activity In the current financial year, authorities are already confronting a significant budget deficit of P26 billion, which has forced fiscal planners to explore multiple financing options to plug the gap.
Responding to members of Parliament's debates on the budget speech, the Finance Minister, Ndaba Gaolathe, revealed that the government was experiencing a major decline in its revenue sources, with savings no longer able to meet the capital appetite the government has.
He revealed that in the absence of savings, the government was forced to borrow prudently in order to enforce fiscal consolidation. He further revealed that the government would not seek immediate consolidation through restrained spending, as economic activity still needed to be induced.
“The global diamond market, a major source of our export earnings and fiscal revenue, has contracted sharply. SACU receipts remain volatile, external demand has weakened, and global financial conditions remain tight,” Gaolathe said.
“With the sustained downturn in mineral revenues, the GIA can no longer serve as the primary shock absorber. In the absence of adequate reserves and amid continued external revenue contraction, responsible borrowing has become a necessary and prudent course of action,” he said.