Govt. turns to AfDB loan to fill budget black hole
With the 2025/2026 financial year presenting an environment of tight fiscal constraints, government has secured a P4.06 billion loan facility from the Africa Development Bank (AfDB) to help plug a massive P22.12 billion funding gap.
The loan, approved by Parliament last Thursday, will finance part of the budget, including financing selected development projects.
Presenting the Botswana Governance and Economic Resilience Support Programme, AfDB Loan Authorisation Bill, 2025, the Vice President and Minister of Finance, Ndaba Gaolathe said the loan was urgently needed to prevent the government from failing to meet its financial obligations.
“Revenue generation for this fiscal year will not sufficiently cover government spending requirements, resulting in liquidity problems in the economy,” said Gaolathe indicating that the financing gap needed to be covered through external and domestic funding or domestic borrowing.
The P22.12 billion budget deficit which is 7.56% of the Gross Domestic Product will see a further P17.9 billion required to meet statutory obligations, mainly debt repayments, which will bring the overall financing requirement to P40.02 billion.
As a result, the projected funding gap will 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.
“The loan is characterised by two mutually reinforcing components, being strengthening fiscal sustainability and transparency and enhancing economic revitalisation for job creation and inclusive growth,” Gaolathe said.
He added that the programme would support government authorities to enhance domestic revenue mobilisation and curb illicit financial flows. “This will 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 Finance Minister further emphasised that the programme will support government authorities to enhance the environment for doing business, and investment facilitation initiatives.
