Africa-Press – Botswana. The over P4 billion loan from the African Development Bank (AfDB) is expected to finance the country’s 2025/2026 funding gap projected at P22.12 billion or 7.56 per cent of Gross Domestic Product (GDP), as per the financing strategy.
Presenting the Botswana Governance and Economic Resilience Support Programme, AfDB Loan Authorisation Bill, 2025 under a certificate of urgency for second reading on Thursday, the Vice President and Minister of Finance, Mr Ndaba Gaolathe explained that the 2025/2026 financial year presented an environment of tight fiscal constraints, which was anticipated to prevail throughout the period.
“The Bill is short of the 30 days maturity period. If it is not accented to and published as an Act, expeditiously, the current fiscal situation will become unturnable as government will fail to honour its financial obligations on account of tight fiscal constraints,” he said.
He said in this regard, revenue generation for this fiscal year would not sufficiently cover government spending requirements, resulting in liquidity problems in the economy. Mr Gaolathe said for this reason, there was need for the loan, which was a general budget support facility to bridge the financing gap for the fiscal year 2025/2026. He also noted that the financing gap needed to be covered through external and domestic funding or domestic borrowing.
“In addition to the P22.12 billion budget deficit, a further P17.9 billion shall be required to meet statutory obligations, mainly debt repayments, which will bring the overall financing requirement to P40.02 billion,” he said.
The minister said in line with the financing strategy for the year, the projected funding gap would be jointly covered through raising external loans, from a syndicate of multilateral development banks, and possibly bilateral banks as well as securities from the domestic market. Giving a brief background, Mr Gaolathe said in May and June respectively, the government resolved to augment the resource envelope by accessing two temporary advances from the Bank of Botswana (BoB) and securing external financing from the AfDB.
The request to include the Governance and Economic Resilience Support Programme, African Development Loan, in the 2025/2026 financing plan, he said was approved by Cabinet, through Presidential Directive Cab No 19(A) 2025, dated July 10, 2025. Mr Gaolathe therefore said the Budget Support Loan offered by AfDB, would be used to finance part of the budget, including financing some development projects in general.
“Typically, a Budget Support Loan is tied to the implementation of an agreed programme of prior actions in the form of policies and reforms. In this case, a programme is designed to support economic governance and inclusive growth through improved fiscal performance and greater private sector participation in the economy,” he explained.
He said the programme outlined priority measures that the AfDB would support to boost the country’s development agenda, during the financial year 2025/2026. Mr Gaolathe said it was characterised by two mutually reinforcing components, being strengthening fiscal sustainability and transparency and enhancing economic revitalisation for job creation and inclusive growth. Under the first component, the Finance minister said the programme would support government authorities to enhance domestic revenue mobilisation and curb illicit financial flows through two prior actions.
The minister said the proposed operation would also support government’s plans to launch a value-added electronic invoicing solution to enhance compliance, efficiency and transparency in tax collection, as well as government authorities’ efforts to improve public expenditure efficiency, transparency and accountability.
He said the operation would also support the strengthening of anti-corruption function by undertaking five corruption audits and six lifestyle audits. Under the second component, the minister said the programme would support government authorities to enhance the environment for doing business, and investment facilitation initiatives. He thanked the MPs for unanimously supporting the Bill given the country’s current economic status.
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