Foreign reserves get depleted

• Significant drop linked to decline in diamonds revenue
• Reserves went down by P0.9 billion as 31^st May 2025
• Govt forced to borrow more and more
• Ndaba believes economic recovery is attainable

BAKANG TIRO

editors@thepatriot.co.bw

An economic briefing by the Bank of Botswana (BoB) executives on Friday painted a gloomy picture for the country’s economic prospects as foreign exchange reserves continue to drastically get depleted driven primarily by weaker demand for diamonds which has led to significant reduction in mineral income.

The foreign reserves had been considered to be strategic investment for the country as Botswana continues to grapple with economic crisis that forced the government to look for money elsewhere – borrowing.

Prior to the BoB briefing, Parliament on Thursday approved a loan worth P6.7 billion comprising of
P4 billion (304 million US dollars) loan from African Development Bank (AfDB) and P2.7 billion (200 million US dollars) from OPEC Fund for International Development (OFID).

The loans followed the P8.3 billion loan acquired from BoB and Botswana Public Officers Pension Fund (BPOPF) earlier this year.

Presenting the highlights of the bank’s financial statements for the year 2024 during BoB economic briefing , Acting Chief Financial Officer (CFO) Thatayaone Magole said as at 31^st May 2025, foreign exchange reserves recorded a P0.9 billion decline from the balance of P42 billion in December 2024.

Overall, Magole said the level of foreign exchange reserves decreased about 24 percent from P63.7 billion in December 2023 to P48.1 billion in December 2024, mainly on account of withdrawals during April 2024.

Magole said the decline in the foreign exchange reserves was as a result of the weaker global demand for the natural diamonds amongst other factors.

Magole also said the bank distributed P4.1 billion in 2024 to the government as compared to P860.5 million in 2023 after a transfer of the unrealised currency gain to the fair value revaluation and the currency revaluation.

The distribution to government comprised P838 million pre-set dividend and P3.2 billion residual income. He said the total assets of the bank decreased by P11.5 billion (17.5 percent) to P54.2 billion from P65.7 billion in 2023.

Speaking on the Foreign Exchange Reserves Management, Director of Financial Markets Department Baitshenotse Nnana Mmopelwa said the foreign exchange reserves are in a steady decline, attributing the decline to weaker sales of Botswana’s rough diamonds.

She said Botswana accumulated significant reserves mainly from diamonds but recently there has been depletion, with the government now relying mostly on revenue from South African Customs Union (SACU).

Mmopelwa said in the past, SACU revenue was a small contributor to foreign exchanges reserves but now there is a significant shift owing to slump in diamond sector performance.

She said foreign exchange reserves are used to pay for imports, building confidence with external investors as it underpins credit ratings as well as being of good use for cushioning the economy against external economic shocks.

Amidst the current economic difficulties, Mmopelwa said as part of remedial action there is an urgent need to expedite diversification of the economy to shift from overdependence on the minerals (diamonds).

Gaolathe

Meanwhile, Gaolathe said the government is continuing to come up with measures to secure economic recovery.

He told Parliament on Thursday following the approval of the AfDB and OPEC loans that the government is cautious of its borrowing and will ensure that the loans are used appropriately for intended purposes.

Gaolathe, who is also the vice president, said there are ongoing strategies implemented by government to turnaround the economy, citing the recently launched Economic Transformation Plan (ETP) as one of the important national blueprints in the quest to achieve economic recovery.