26th January 2023
Own Correspondent
The Botswana Government has signed a Budget Support Loan Agreement with OPEC (Organization of the Petroleum Exporting Countries), to support a number of development projects official revealed.
Botswana has had a relationship with the OPEC Fund for International Development, the Fund in short, since 1977. The Fund has financed a number of development projects in the country including but not limited to: Mahalapye-Serule Road Project, which was funded at US$ 1 million in 1977; Middlepits-Bokspits Road Project funded in 2009 at US$7.87 million; the SSKA International Airport Upgrading and Expansion Project funded in 2008 at US$20.59 million and the recent Botswana Integrated Transport Project (BITP), which was funded at US$ 40 million in 2019.
“Cumulatively, the Fund has provided financial assistance of up to ninety-one million, six hundred and twenty-six thousand, five hundred and seventy-three US Dollars (US$ 91 626 573) to date. For this reason, I would like to express my gratitude, on behalf of the Government of Botswana and the people of Botswana, for your continuing efforts to help drive our developmental agenda,” said Peggy Serame, Minister of Finance and Economic Development.
She said, “The sharp decline in economic activity associated with lockdowns and other restrictions in response to the COVID-19 pandemic caused a substantial reduction in government revenues during the financial year 2020/2021. As a result of the successive budget deficits, the net financial assets were equivalent to minus 20 percent of GDP in 2021, as the Government Investment Account was significantly drawn down.”
According to officials these adverse circumstances have had a deleterious effect on Government revenues and have accentuated expenditure pressures. Therefore, the country is experiencing budgetary shortfalls, which need to be financed largely through borrowing. Previously, these budget deficits were financed by drawing down on fiscal savings that had been accumulated over the years, which are no longer available as an option.
While the economy was on a recovery path from COVID-19, Russia-Ukraine conflict occurred in 2022, which undermined the recovery in most economies including Botswana’s. Despite improvements in revenue and general macro-economic performance in 2021, which saw the country’s GDP growth recovering to 11.8 percent and the projected moderate growth of 4.2 percent in 2022, budget challenges still persist. However, despite all this Government continues to roll out various growth-enhancing economic transformation and social reforms, as well as supportive macroeconomic policies.
“Today we are assemble here to sign the financing agreement for the Botswana Programmatic Economic Resilience and Green Recovery Budget Support Loan between the OPEC Fund and the Government of Botswana, negotiations of which were concluded in September 2022,” said Serame.
The overall objective of this loan is to support the Government’s efforts through the strengthening of its pandemic and crisis response, addressing the regulatory constraints for private sector recovery as well as building the foundations for a sustainable green economy. Similar to preceding loans, the proceeds of this particular loan, shall be channeled towards the intended purposes.
The Ministry of Finance has the primary responsibility of sourcing funding for Government at the lowest possible cost, consistent with an acceptable degree of risk.
