The Bank of Botswana (BoB) made a once-off payment of P4.1 billion to government earlier this year as income from gains made in the investment of state funds last year, BusinessWeek has established.
Data seen this week shows the payment was made in April and helped the first quarter of the 2019-2020 budget to a P2.1 billion surplus, in a year in which the fiscal year is expected to record a P7.8 billion deficit.
The BoB’s payout comes as questions are raised about the central bank’s management of government funds, after prosecutors in a magistrate court case this week alleged political leaders had pilfered billions in previous years.
The central bank previously denied separate reports of missing billions that were alleged to have slipped through unreconciled balances owed to government and held at the BoB.
This week, Finance Ministry officials were quick to explain that the P4.1 billion unexpected windfall had nothing to do with allegations of unreconciled balances or any other suspect source.
“In addition to the dividends expected to be received from the management of foreign exchange reserves, there was a residual income received as realised gains,” Finance Ministry officials said in a written response to enquiries. “For the 2019-2020 fiscal year, the pre-set dividend is estimated at P948 million, to which P4.1 billion residual income arising from the BoB’s operations the previous year ending December 2018, is added, making it P5.1 billion.
“However, as this is a once-off payment,
Under law, government as the BoB’s sole shareholder is entitled to all profits the central bank makes, after it accounts for its expenditure.
While the bank and government decide on a pre-set dividend every year earned from the management of foreign reserves, any gains above this are also transferred to the sole shareholder, government.
Finance Ministry data indicates that the BoB’s revenues as a contribution to government swung from P1.6 billion in 2017-2018, to P740 million in 2018-2019 to the projected P5.1 billion in the current fiscal year. The revenues are projected to decline to P1.2 billion next year.
“The level of BoB revenue is influenced by performance of the global financial markets as well as exchange rate movements between the pula and other international currencies where funds are invested,” finance officials explained.
Econsult officials, in a third quarter commentary released on Monday, cautioned that while the windfall had helped the first quarter to a surplus, the overall outlook was still negative.
“Because of this ‘windfall’ income, the outturn should not be taken as representative of the year as a whole, for which a substantial deficit is projected,” the firm’s researchers stated.