Botswana in talks with World Bank for budgetary support after Covid hit

Botswana had approached the World Bank for budgetary support after the coronavirus crisis dented revenue, finance minister Thapelo Matsheka said on Thursday.

Botswana has registered relatively few cases, but lockdown restrictions have disrupted economic activity and reduced income in the key diamond mining and sales sectors.

“We have set up a team and the World Bank has also set up a team to assist us,” Matsheka said.

“No quantum is in place yet but ideally if we can get about 50% of the expected P13.6-billion deficit for the remainder of the development plan which ends in 2023, that should give us a smoother landing into the next development plan.”

The World Bank's Botswana representative Guido Rurangwa said talks on the request for budgetary support were ongoing.

“The government and the World Bank are currently discussing details of the support, including the amount,” Rurangwa said in an e-mailed response.

Botswana's parliament in September approved a P14.5bn economic recovery plan, which Matsheka said would be funded through a combination of local borrowing and external sources.

Parliament had also approved a government request to double its domestic borrowing programme to P30bn to fund its budget deficit and economic stimulus.

Matsheka said on Tuesday Botswana's economy is forecast  to  grow 7.7% in 2021 from a 8.9% contraction in 2020, on the back of improved sentiment in the global diamond industry.

Botswana's economy shrank by 24% in the second quarter of 2020 as coronavirus lockdowns at home and abroad slowed economic activity and severely constrained diamond sales.

Buyers of the precious gem were locked out of the capital Gaborone, where they purchase diamonds from De Beers.

Mining is the sparsely populated country's biggest revenue earner and accounts for just under 20% of total GDP.

Reuters