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Govt doubles domestic borrowing limit from P15 Billion TO P30 Billion

BOB Governor: Moses Pelaelo

Bank of Botswana and Ministry of Finance & Economic Development have submitted a proposal to President Mokgweetsi Masisi seeking to increase government domestic borrowing from P15 billion to P30 billion, Minister Matsheka revealed at a press briefing recently.

Domestic borrowing is one of the key instruments used by government to fund budget deficits and national development pursuits, in turn also developing the local capital market. Through Bank of Botswana Government borrows money from the local capital market by issuing bonds and treasury bills on the stock exchange on a quarterly basis.

At the latest Government Bonds and Treasury bill auction held on the 28 February, Bank of Botswana (BoB), on behalf of Government offered additional tranches to existing and listed bonds. BW013 was reopened and P300 million was allotted, increasing BW013 total nominal amount in issue to P1, 576.00 Million. BW014 was also reopened and P400.0 Million was allotted, increasing its total nominal amount in issue to P2, 140.00 Million.

Furthermore BW015 was also reopened and P95.0 Million was allotted, increasing its total nominal amount in issue to P746 Million. Currently Government has seven (7) issued bonds on Botswana Stock Exchange, at market capitalization of P12.7 billion.

Government limit on borrowing from local capital market has been initially set at P15 billion. When lobbying Ministry of Finance to push for a higher limit Bank of Botswana said this would cultivate more activity in the local capital market in turn also reducing the risks of drawing down from reserves and the risk of borrowing externally at exorbitant interest and foreign exchange rates.

Advancing its case Bank of Botswana said fiscal authorities shift their preferred option for funding infrastructure projects and budget deficits from the reserves, to domestic debt.

BOB Governor, Moses Pelaelo explained early this year when delivering February monetary policy statement that borrowing more local capital market offers government a viable avenue for cost effective domestic resource mobilization for long-term investment and funding of government projects.

Our proposal is premised on designing a transparent and 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, said Pelaelo in February this year.

Pelaelo added that this would result in adoption of sound governance architecture around public debt management underpinned by the countrys well established track record of prudent fiscal policy and strong institutions.

Bank of Botswana reiterated that drawing down from reserves erode fiscal buffers especially taking into account the vulnerability of Botswana to trade shocks, climate change and prolonged droughts.

The Central bank underscored that there is need to maintain sufficient fiscal and external buffers explaining that this would require building sufficient resilience to afford the fiscal space to undertake countercyclical stabilization when necessary.

The need for an increased domestic borrowing has escalated due to doubled deficit as a result of COVID 19 economic impacts. Botswanas budget deficit which was projected around P5 billion for the 2020/21 financial year has now ballooned to P10.8 billion. This will now be around 5.4 % of GDP, breaking the set threshold of 4 %-GDP.

Quizzed on how government will finance the budget deficit Minister of Finance & Economic Development Dr Thapelo Matsheka said Botswana was contemplating engaging global funders, but will not rush into such a decision.

We have not reached any decision as to how much we would borrow externally from institutions such as International Monetary Fund (IMF), World Bank and African Development Bank, any other funding institution or foreign country,” he said.

Dr Matsheka added that, My office is currently in talks with Botswana representatives at these institutions and we will look at a number of factors before coming to a decision of who we going to borrow from and how much we going to borrow. The Minister revealed that a proposal has been submitted to President Masisi for government to increase its domestic borrowing from P15 billion to P30 billion.

This bond program will present us with an opportunity to borrow more from our local capital market and finance our deficit and projects without drawing down from our reserves or getting expensive credit facilities externally, he said.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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