Gov�t raises P4bn on bond market
Brian Benza | Friday January 27, 2017 18:00
According to figures released by the Botswana Stock Exchange (BSE), tap issuances and new bond issuances, helped push the bond market capitalisation of listed bonds to P12.2 billion compared to P10.1 billion as at the end of 2015.
During the year 2016, Bank of Botswana (BoB), on behalf of government, held four bond auctions in which it raised a total of P2 billion from Treasury Bills and another approximately P2 billion issued bonds.
In the 2016/17 financial year, which ends in March, government has projected a budget deficit of P6 billion which it will fund through the bond auction as well as drawing down on the Government Investment Account (GIA) at the BoB.
As at November 2016, the Pula Fund in the GIA stood at P32.7 billion down from P36.2 billion at the same time in 2016, reflecting a drawdown of P3.5 billion in the period.
During the 2016/17 financial year government aims to raise P48.4 billion, P3.4 billion lower than the estimated P51.8 billion that was raised last year, thanks to the government’s expectations of lower minerals prices and its dim view on customs and excise receipts.
On the whole, total expenditure and net lending is budgeted at P54.4 billion, resulting in a relatively modest deficit of P6 billion or 3.6% of GDP. Looking ahead, government might however be expected to seek foreign funding in the next coming years as rolling budget deficits are seen printing to a cumulative P24 billion in the next three years.
Largely due to a P4 billion rise in development expenditure, government’s spending is expected to outweigh revenues in the 2017/2018 financial year by P6.8 billion or -4.1% of the GDP.
Deficits of similar magnitudes are seen until 2019 before the budget shortfall declines to -2.2% in 2020.
Speaking at a 2017/2018 Budget Pitso, deputy secretary for Macroeconomic Policy in the Ministry of Finance and Economic Development, Kelapile Ndobano said the deficits are attributable to the projected modest growth in revenues, and continued pressures arising from the implementation of the Economic Stimulus Package (ESP).
The projected total revenues and grants for 2017/2018 is P52.8 billion with P59.6 billion expenditure, of which P40.8 billion is earmarked to cover the recurrent expenditure, while P18.9 billion is planned as development expenditure.
Meanwhile, the bond market capitalisation in 2016 was also boosted by the listing of six new corporate bonds from three issuers, which raised a total of P652.1 million.
PrimeTime Property Holdings Limited (PTP) listed three corporate bonds in 2016, rasing a total of P155 million.
The Botswana Development Corporation raised P225.26 million while First National Bank Botswana (FNBB) also listed two bonds for P161.84 million and P40 million respectively.