Total domestic borrowing and guarantees hit P24.7 billion in June 2022, amounting to 10.8% of GDP, under the 20% statutory domestic borrowing limit, says a report published by the Bank of Botswana.

“External debt is estimated at 10.1% of GDP in the same period, which is also below the 20% threshold for Botswana,” the report states.

The so-called Financial Stability Report (FSR) was compiled by the central bank in collaboration with the Ministry of Finance (MoF), the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the Financial Intelligence Agency (FIA) and the Botswana Stock Exchange Limited (BSEL), The Gazette reports.

The publication of the report was approved by the Financial Stability Council (FSC), an organisation set up in 2019 to work together and swap information on financial stability issues impacting the country’s financial system.

Furthermore, this report highlights the forecast that the impact of the pandemic would continue until the 2022/2023 fiscal year: “During the second half of 2021, Government secured a USD250 million (P2.8 billion) loan under the Programmatic Economic Resilience and Green Recovery Development Policy Loan, at the International Bank for Reconstruction and Development (IBRD), for financing of economic recovery,” the report states.

In addition, the report says Botswana’s long-term borrowing costs will likely be positively impacted by the country’s sovereign credit rating for long and short-term foreign and local currency sovereign credit at “BBB+/A-2” and the stable outlook.

“The ratings were conferred by S&P Global Ratings (S&P) on September 16, 2022. The ‘stable’ outlook is on the backdrop of expectation that the demand for Botswana’s diamonds will remain strong against downside risks presented by the weakening global economic activity,” the report adds.

In addition, the findings reveal that Botswana’s strong institutional frameworks bolster investment grade BBB+ and A-2 credit ratings.

These boosted the country’s strong monetary policy framework; the proactive central bank; together with robust mineral revenues; all supporting macroeconomic stability.