Govt targets P2.1bn debt at bond auction

The Bank of Botswana (BoB), as government’s banker, conducts monthly auctions of treasury bills as well as bonds to primary dealers who are exclusively banks. At the auctions, the dealers compete to lend to the government by offering the yields they are seeking, with the BoB deciding the 'stop-out' yield or the level of interest it is willing to pay the dealers on particular securities on offer.

However, since its approval by Parliament last September, the P30 billion domestic borrowing programme has underperformed, with the dealers demanding yields higher than the BoB and government have been willing to accept. The situation threatens government’s ability to fund the budget deficits it has forecast for the 2020-2021 and 2021-2022 fiscal years, which amount to about P20.6 billion.