Botswana’s Debt Nears Ceiling, Raising Financial Stability Concerns
Botswana faces a potential challenge as its government debt approaches the statutory limit. The Botswana Public Officers Pension Fund (BPOPF) has highlighted the country’s increasing reliance on domestic institutional investors to finance its budget. This trend is leading to a concentration risk within the financial system.
Pension Fund Warns of ‘Tight Liquidity’
In a brief titled “Botswana Tight Liquidity Situation And Prime Lending Rate Liberization,” the BPOPF expressed concerns about increased pension asset exposure to government debt. They also noted the rapid exhaustion of local lending capacity, which could undermine overall financial stability.
As of June 2025, Botswana’s domestic debt reached P42.6 billion, representing approximately 18.7% of its Gross Domestic Product (GDP). This figure sits just below the 20% legal limit, prompting worries that the government might exceed this ceiling before the current financial year concludes.
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