‘Reserves ringfencing’ debate stirs as GIA falls

Advising: Technocrats at the BoB are engaging government on the reserves PIC: MORERI SEJAKGOMO
Advising: Technocrats at the BoB are engaging government on the reserves PIC: MORERI SEJAKGOMO

The Bank of Botswana (BoB) has reignited the debate on protecting a portion of the country’s reserves from frequent withdrawals, with tentative discussions held with the IMF on what the legal framework could look like.

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.

Editor's Comment
CoA brings sanity to DIS/DCEC long-standing feud

This decision follows the raiding of the office of the former Director General of the DCEC, Tymon Katlholo early 2022 and his staff officer by the DIS operatives who reportedly took files that they had targeted.After all back and forth arguments, the CoA has set the record straight giving an invaluable lesson to the DIS that it was no super security organ and it does not have any powers to cogently supervise other security organs including the...

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