Africa-Press – Botswana. Parliament has approved a loan authorisation Bill requesting for approval of the Governance and Economic Resilience Support Programme (OPEC Fund for International Development) loan, estimated at P2.6 billion (US$ 200 million), to be used as budget support for the financial year 2025/2026.
Presenting the Bill on Thursday, the Vice President and Minister of Finance, Mr Ndaba Gaolathe said government found it necessary, in addition to many other steps, to raise the loan that was being pursued in sync with the African Development Bank (AfDB). Mr Gaolathe said the loan would be used to enhance the country’s fiscal stability, strengthen government frameworks and improve economic resilience.
“This amount has been approved by OPEC as a policy-based loan, which will co-finance the Governance and Economic Resilience Support Programme with the AfDB,” he explained.
He said the loan’s terms and conditions were in sync with the AfDB, adding that the budget support loan was tied to the implementation of an agreed programme policy matrix that specified a set of measurable and time bound reform areas, which the government had committed to execute as conditions precedent. Mr Gaolathe said the reforms were underpinned by two mutually complementary components, being strengthening fiscal sustainability and transparency as well as enhancing economic revitalisation for job creation and inclusive growth.
He said the agreed terms for the loan entailed US$ 200 million, estimated at P2.6 billion, a repayment period of 20 years, inclusive of five-year grace period, a variable exchange rate based on a six-month secured overnight reference rate, plus a 1.6 per cent per year, which gives an effective rate of 5.72 per cent per year, a once-off front-end fee of 0.25 per cent of the loan amount and a commitment fee of 0.25 per cent per year charged on committed assets.
“The Stocks, Bonds and Treasury Bills Act of 2005 governs government borrowing and sets a legal borrowing limit of 40 per cent. As such, the total public debt would be projected to just over 34.64 per cent by the end of 2025-2026,” he added.
The minister further explained that the framework would focus on priority public sector projects aligned with national development goals, including; infrastructure modernisation, renewable energy, digital transformation, quality of life improvements and private sector development.
On behalf of the government, Mr Gaolathe expressed gratitude to the OPEC Fund for its commitment to the country’s development agenda. He said the OPEC Fund was also keen to partner with Botswana and support the country through an initial three-year country partnership framework of more than P10 billion (US$ 800 million), even beyond the loan deadline.
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