‘Reserves ringfencing’ debate stirs as GIA falls

Since at least 2020 when government dug deeply into the reserves to finance the COVID-19 budget response, the central bank has been advocating for a portion of the savings to be set aside or “ringfenced”. The Pula Fund, which houses the country’s savings comprising decades of budget surpluses and diamond revenues, took a beating during the pandemic and has been gradually recovering since, as the economy has gathered momentum.

Government’s own savings, as housed in the Government Investment Account (GIA), managed by the Bank of Botswana, sank to P3 billion during COVID-19 before recovering to a peak of P18.6 billion last April helped by the strong diamond rebound in 2022. However, since then, the GIA has been sliding due to higher budget spending, reaching a post-COVID low of P5.2 billion in April 2024.