News / National
Botswana gets $304 million AfDB loan
10 hrs ago | Views
The African Development Bank (AfDB) has approved a $304 million loan to Botswana as the country grapples with rising fiscal pressures and seeks to implement crucial governance and economic reforms. The loan, which was approved by the AfDB's Board of Directors on Wednesday, will fund the Governance and Economic Resilience Support Programme (GERSP), a one-year general budget support initiative designed for the 2025/2026 fiscal year.
The southern African nation is facing mounting economic challenges following a contraction of 1.7% in 2024. The downturn has been largely attributed to a sharp decline in global demand for diamonds, which account for around 80% of Botswana's export earnings. This external shock has placed strain on the country's public finances, widening the fiscal deficit from a balanced budget in the 2022/23 financial year to 4.7% of GDP in 2023/24. The deficit is projected to expand further, reaching 6.7% in the current fiscal year.
The GERSP aims to support the government in stabilizing its fiscal position while promoting policy reforms that enhance governance, strengthen economic resilience, and foster inclusive growth. The AfDB emphasized that the program is intended to help Botswana navigate short-term economic pressures while laying the foundation for long-term sustainability.
Botswana's government has been under increasing pressure to diversify its economy and reduce its reliance on diamond exports, which are vulnerable to global market fluctuations. The AfDB's support is expected to provide much-needed fiscal breathing room while facilitating reforms in public financial management, transparency, and economic diversification.
The loan reflects the AfDB's continued commitment to supporting African countries in maintaining macroeconomic stability, especially in the face of external shocks and structural vulnerabilities. As Botswana implements the GERSP, the funding is expected to play a key role in maintaining investor confidence, enhancing public service delivery, and accelerating recovery in the wake of the current economic slump.
The southern African nation is facing mounting economic challenges following a contraction of 1.7% in 2024. The downturn has been largely attributed to a sharp decline in global demand for diamonds, which account for around 80% of Botswana's export earnings. This external shock has placed strain on the country's public finances, widening the fiscal deficit from a balanced budget in the 2022/23 financial year to 4.7% of GDP in 2023/24. The deficit is projected to expand further, reaching 6.7% in the current fiscal year.
Botswana's government has been under increasing pressure to diversify its economy and reduce its reliance on diamond exports, which are vulnerable to global market fluctuations. The AfDB's support is expected to provide much-needed fiscal breathing room while facilitating reforms in public financial management, transparency, and economic diversification.
The loan reflects the AfDB's continued commitment to supporting African countries in maintaining macroeconomic stability, especially in the face of external shocks and structural vulnerabilities. As Botswana implements the GERSP, the funding is expected to play a key role in maintaining investor confidence, enhancing public service delivery, and accelerating recovery in the wake of the current economic slump.
Source - byo24news
