Minister of Finance and Economic Development, Kenneth Matambo has told parliament that government has no intension of reviewing the Stock, Bonds and Treasury Bills Act.
Matambo was responding to a question from Specially Elected Member of Parliament, Bogolo Kenewendo who has been putting Matambo to task in parliament lately with calls for accountability and clarity on a number of treasury related matters. Kenewendo wanted to know why guarantees are treated as debt; what percentage of the Government’s debt is made of guarantee; and which Government entities and projects have received guarantees. The youthful legislator further wanted Matambo to share with lawmakers when the Stock, Bonds and Treasury Bills Act will be reviewed in line with international standards.
For his part, Matambo told parliament that at the time when guarantees are given, they are not a debt but are rather a contingent liability. According to the Minister the Stocks, Bonds and Treasury Bills Act requires that when the total public debt exposure is determined, the guarantees should be included in the event of default.“This allows the Government to be able to honour such obligations when they occur,” he said. Minister Matambo who is also Special Elected Member of Parliament told Members of Parliament that guarantees constituted 29.9% of Government debt as at 31st March 2017.
He said the Government entities to which guarantees have been given or extended were the Okavango Diamond Company; the loss making Botswana Meat Commission; heavily indebted Botswana Power Corporation; the Water Utilities Corporation; as well as Debt Participation Capital Fund Limited and Government Employees Motor Vehicles and Residential Advance Scheme (GEMVAS).
Matambo said the Stocks, Bonds and Treasury Bills Act was reviewed in 2005 and that there was no intention at present to review it again. “Furthermore, there is no indication that the debt law is not in line with international standards in our judgment,” he said. In addition Matambo said the country’s legal framework governing public debts was not limited to the Stocks, Bonds and Treasury Bills Act alone, but also includes the Constitution of the Republic of Botswana, Bank of Botswana Act, Public Finance Management Act and Local Government Act. “The provisions in all these pieces of legislation with respect to debts management are considered by us to be adequate,” he explained.
Kenewendo had further argued that though guarantees are a contingent liability, Matambo should clarify whether in the event the ministry calculates total public debt exposure, does it treat it as a 100 per cent liability or not. “So, this 29.9 per cent, is it risk weighted amount of the guarantees or it is the total figure of exposure due to these guarantees?” she quizzed. Kenewendo further said in relation to international standards in other countries, the Act would be specific to the weighted risk that would be calculated and included in our total debt exposure. “Is that something that you are willing to do?” she further screened on Matambo’s ministry.
In response Minister Matambo said the proportion of total exposure that he refered to as 29.9% is not weighted contingent liability but total contingent liability. He further highlighted that it is the full value that his ministry take into account when calculating total exposure. “Therefore, by the same token, it is not risk weighted,” he said.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.