The Board of Directors of the African Development Bank Group has approved a $137 million loan to support Botswana’s economic recovery from the Covid-19 pandemic.
The facility (loan), termed the Bank Group’s Botswana Economic Recovery Support Program, will be focused on mitigating fiscal risks to enhance macroeconomic performance, by supporting the government’s capacity to implement key structural reforms. These measures include fostering private-sector-led agricultural and industrial growth, bolstering their economic value addition, and increasing job prospects. Micro and small enterprises will also receive business development support to advance social protection and gender equity initiatives.
“The African Development Bank is providing support for reforms to enhance private sector-led agriculture, and transformation of the industrial sector”said Leila Mokadem, Director General of the Southern Africa Regional Development and Business Delivery Office
This loan follows another extended by the World Bank in June 2021 (US$250m under the Programmatic Economic Resilience and Green Recovery Development Policy Loan), along with increased local debt issuance since 4Q2020. We expect Botswana’s government debt to reach a level of approximately 25% of GDP by 2023, given the increased support required to finance economic recovery and transformation measures, from a level of approximately 20% of GDP in the 2020/21 fiscal year. Despite this view, the country remains at low risk of debt distress based on a positive medium-term growth outlook.
