Public debt to rise on budget deficit
Botswana’s domestic and external public debt, in absolute terms, and as a percentage of GDP, will increase to finance the budget deficits related to the COVID- 19 expenditures. According to Bank of Botswana, Special Research Bulletin on External Demand , total public debt has been below the maximum statutory threshold of 40 percent of GDP, which comprises 20 percent ceilings for external and 20 percent for domestic debt, including debt guarantees. “However, given the adverse impact of COVID- 19 containment measures on economic activity generally, and more specifically on exports receipts, public debt is expected to increase considerably to finance current account deficit, which stood at P18.3 billion in 2020.” The paper pointed out that although public debt rose significantly in the recent past, especially following the 2008/ 09 global financial crisis, Botswana’s debt service matrices and overall sovereign debt level have been relatively prudently managed, remaining well below the country’s statutory maximum threshold of 40 percent of GDP, during and in between the two major global recessions, 2008- 09 and 2020.