The Minister of Finance Peggy Serame is highly confident that the P1.2 billion loan that Botswana has secured from the Organisation of Petroleum Exporting Countries Fund for the International Development Fund (OPEC) will boost the country’s budget and power the economy.
Serame was speaking on Thursday in Gaborone at the signing of the loan with the OPEC Fund officials. She said OPEC Fund has been instrumental in funding economic development projects of high magnitude, emphasizing that the country will borrow from OPEC in the future.
According to Serame, the government of Botswana will ensure that the loan is fully used for the intended objectives of Botswana Programmatic Economic Resilience and Green Recovery Programme. “The loan will help Botswana to strengthen her pandemic and crisis response, enhancing the private sector growth and supporting transition towards greening the economy,” said Serame.
She said the terms of OPEC loan were favourable hence the government’s decision to secure it. “Botswana has a good relationship with OPEC Fund dating back from 1977. It is important that we continue to nourish this relationship. Government faced budget buffers in the past and will continue to borrow from both domestic and external sources for funding budget,” said Serame.
In addition, Serame said some of the OPEC Funded projects in Botswana have transformed economy, citing among others Mahalapye-Serule road project funded at the tune of USD1 million in 1977.
Serame also said the upgrading of Sir Seretse Khama International Airport (SSKIA) in 2008 was funded by OPEC at a budget of USD20.59 million, noting that cumulatively OPEC funded projects in Botswana stand at the tune of USD91 million. Serame said OPEC remained a key development partner to Botswana.
OPEC Fund Director General Dr Abdulhamid Alkhalifa said OPEC Fund is happy to be a partner in the recovery of Botswana post the COVID-19 pandemic that derailed economic growth.
Dr Alkhalifa said the loan is very important to Botswana as it focuses on three (3) areas of economic development being response recovery, private sector reinforcement and transition to green economy.
“Swift economic recovery after COVID-19 is important and the private sector capacitation is vital for economic development. OPEC Fund will mobilise other funding institutions towards Botswana for them to focus on private sector development funding,” said the upbeat Alkhalifa.
Dr Alkhalifa said it was important for Botswana’s recovery to be both short and long-term.
As a result of the ongoing impact on both government revenues and expenditure, the minister said Botswana is experiencing budget deficits, which need to be financed by borrowing.
Parliament approved Serame’s request to secure the OPEC funding in September last year.
Some of agreed terms and conditions include commitment fee that comprises 0.25 percent charged on undisbursed balances with a 17 year maturity plus four year grace period. It was for this reason that Botswana found OPEC Fund terms favourable. Due to the projected budget deficit of P6.98 billion for the financial year 2022/23 Serame said it will be financed through a combination of issuance of domestic government securities and external borrowing. Serame reiterated in the past that her ministry will continue negotiating with both multilateral and bilateral institutions with the main consideration being to raise loans at moderate interest.