Banks face ‘unprecedented’ liquidity crunch

Friday, March 07, 2025 | 2580 Views |

Engines of the economy: Small businesses are at the centre of economic activity in the country, but the liquidity crunch means their funding may be limited PIC: MORERI SEJAKGOMO

The local banking sector is facing an 'unprecedented' liquidity crisis that threatens to hamper the lending activities required for the private sector’s growth, BusinessWeek has established.

The Bank of Botswana (BoB) released about P1.8 billion to banks in December, as liquidity dried up in the market because of a slowdown in government spending related to the prolonged diamond slump.

The situation has not abated this year and could intensify as government digs deeper into the capital market for debt to finance the P22.1 billion deficit expected in the 2025–2026 financial year.

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