Botswana’s efforts to accelerate key economic reforms got a boost following the approval of a $250 million loan by the World Bank today. The Programmatic Economic Resilience and Green Recovery Development Policy Loan (DPL) will support the implementation of Botswana’s Economic Recovery and Transformation Plan and is designed to strengthen COVID-19 pandemic relief while bolstering resilience to future shocks.
This DPL is also designed to support reforms to strengthen private sector development and promote green recovery. It is the first-ever World Bank budget support operation for Botswana and the first of two planned operations.
‘The COVID-19 pandemic has placed a great burden on the country’s economy, its people, and firms. With this operation, the World Bank will support the government’s reforms to ensure social spending reaches the poorest and assists Batswana who are most affected by the Covid-19,’ says World Bank Country Director for Eswatini, Botswana, Lesotho, Namibia and South Africa, Marie Francoise Marie-Nelly. ‘This operation will also support reforms to attract private sector investments, contribute to diversification of exports, and increase job opportunities towards a green economy’.
The operation provides both financial and technical support for government reforms to implement a Single Social Registry and to improve targeting of social spending on the most vulnerable while strengthening systems for future shocks. It will also help strengthen the business environment for increased SME-led job creation and economic diversification through improved access to finance for individuals and small and micro enterprises (SMEs).
Furthermore, the program will help Botswana to build the foundations for sustainable, ‘green’ growth by supporting reforms to increase production of renewable energy by independent power producers, promoting and regulating rooftop solar energy generation, and embedding climate change considerations in environmental assessments.
DPLs are used by the World Bank to support a country’s policy and institutional reform agenda to help accelerate inclusive growth and poverty reduction. The COVID-19 pandemic led to a real gross domestic product (GDP) contraction of 7.9 percent in Botswana in 2020 – the largest in the country’s history. This has also led to a depletion of existing fiscal buffers and has constrained revenue collection, reduced Government’s capacity and resources needed to accelerate the implementation of structural reforms and threatened to reverse progress in poverty reduction.
World Bank Group COVID-19 Response
Since the start of the COVID-19 pandemic, the World Bank Group has committed over $125 billion to fight the health, economic, and social impacts of the pandemic, the fastest and largest crisis response in its history. The financing is helping more than 100 countries strengthen pandemic preparedness, protect the poor and jobs, and jump start a climate-friendly recovery. The Bank is also providing $12 billion to help low- and middle-income countries purchase and distribute COVID-19 vaccines, tests, and treatments.