Botswana’s National Assembly on Wednesday endorsed the doubling of the southern African country’s domestic borrowing to 30 billion pula (about 2.9 billion U.S. dollars).
Thapelo Matsheka, minister of finance and economic development, had approached parliament seeking the approval of lawmakers to increase the bond program ceiling from 15 billion pula (about 1.45 billion dollars).
Against the backdrop of an economic slowdown caused by the COVID-19 pandemic, Matsheka told parliament that increasing the limit for domestic borrowing was one of the fundamental options to fund the national budget.
Botswana, which boasts one of the highest sovereign credit ratings in Africa, is conventionally unenthusiastic about external funders for loans before exhausting all the available options domestically, hence increasing the bond program ceiling.
“The development would cultivate more activity in the local capital market, which in turn would reduce the risks of drawing down from reserves and the risk of borrowing externally at exorbitant interest and foreign exchange rates,” Matsheka said after the parliamentary approval.
Moses Pelaelo, governor of the Bank of Botswana, said borrowing more local capital market offers the government a viable avenue for cost-effective domestic resource mobilization for long-term investment and funding of government projects.
“This will result in a more frequent issuance of a sufficient quantum of domestic government securities in a predictable arrangement that hopefully will attract a larger pool of participants and support deficit financing with lower risks,” Pelaelo said in a telephone interview with Xinhua.