One of the biggest, most critical issues from the budget, was a never-before-seen budget deficit of P6 billion (about three percent of GDP). Combined with a revised deficit of P21 billion for year 2020/21, this meant that government was short of money to be able to run its programmes and commitments this year. Minister Matsheka also announced his plans on how he would cover that shortfall using the following avenues: borrowing from local investors by issuing bonds, borrowing money from external lenders, tapping into foreign reserves and increasing taxes and improving collection of levies etc.
Consistent with the strategy, since January 2021 Government has attempted to raise P4.5 billion by asking local investors to buy government bonds at auctions held on a monthly basis. Government has only successfully raised P1.549 billion (30%) of what it has intended. In the May 14, 2021 edition of Mmegi, the Governor of the Bank of Botswana (BoB), Moses Pelaelo decried the low uptake or interest in government bonds (essentially lending money to Government). The Governor expressed that they will undertake an exercise to find out why investors seem not to be interested in the bonds though they have asked for them in the past. This article therefore will try to explain this phenomenon and what Government might need to do in future to make its effort to raise funds for the deficit more successful.
