Under the government’s domestic note issuance programme, the Bank of Botswana acting as the ministry’s agent in the capital market, auctions Treasury Bills and bonds every month to raise debt funding for the budget.The ministry has increased the programme’s ceiling twice since 2020, moving from P15 billion to P30 billion in September of that year, and then to the current P55 billion in March 2024. The first increase was to finance COVID-19 spending, whilst the second and the planned third are due to widening deficits associated with the prolonged downturn in diamonds.The central bank’s website indicates that government’s outstanding debt under the programme, raised through the monthly auctions, stood at P43.6 billion as at August 7. Another P3.1 billion is targeted at the August 28 auction.According to a recent note posted to the Finance ministry’s official social media, a ministerial team recently briefed Parliament’s Finance and Estimates Committee on plans to raise the programme’s ceiling from P55 billion to P85 billion.“The committee also received a presentation from Director of Budget Analysis and Debt Management, Seitebaleng Fologang, on the Ministry of Finance’s request to increase the Government Bond Issuance Programme ceiling from the current limit of P55 billion to P85 billion,” the note reads.Fologang also reportedly briefed the committee on the ministry’s request for Parliament to approve a Syndicated Loan Facility involving funding from ABSA Bank Botswana, First National Bank Botswana and Stanbic Bank Botswana.In March, the Government Gazette carried a notice on the ministry’s intentions to seal a $216.6 million (about P3 billion) loan from the three banks. The loan matures in 10 years and is one of four hard currency loans the government has either secured or plans to seal with local banks this financial year.Analysts have cautioned government to maintain a tight leash on both the quantum of its borrowings, as well as the cost, given the still weak recovery being seen in the economy.Finance Minister Ndaba Gaolathe and his lieutenants have assured on the debt trajectory, noting that the public finance rules were being followed, debt to GDP was still low compared to other African countries and the budget was beginning to show signs of stabilisation. Fiscal authorities have pledged to maintain spending cuts on the recurrent budget and direct more debt towards development projects, particularly those which provide measurable returns or have the potential to be self-liquidating.The Finance ministry shared the responses of the Finance and Estimates Committee to the debt proposals. “Members of the committee sought clarification on both proposals and made submissions as part of their oversight role in scrutinising proposed legislation and considering requests for supplementary funding before making recommendations to Parliament,” the note said.The Finance and Estimates Committee will make its recommendations on the ministry’s proposed debt requests to Parliament before debates and a vote take place. The domestic note issuance programme is financing the lion’s share of the budget deficit for this financial year, which is projected at P26.4 billion or 8.9% of GDP.The Finance Ministry is due to provide updated budget and economic growth figures in the midterm budget statement expected in October.
