Gov’t coffers dry up

Deposits held at the Bank of Botswana (BoB) are at historically low levels, due to the current fiscal landscape, the Ministry of Finance has revealed.The development is posing risk to the economy, as government may not honour its obligations, due to the dwindling cash reserves.More scratching of heads is becoming the order of the day, technocrats at the Ministry of Finance will need to fortify the national budget and lay a strong foundation for future growth and public service delivery.Authorities at the Ministry of Finance have warned the situation will drive the government into further payment arrears for the 2025/26 financial year, ending in April, unless buffers are replenished.According to the ministry, the low levels of the government investment account (GIA) are beyond sustainable levels, following a sharp decline in revenue inflows during 2024.Statistics indicates that by December 2024, the GIA closed at its lowest balance of P0.251 billion, compared to P8.6 billion a year earlier.“Since then, inflows have remained volatile and at times insufficient to meet expected government expenditure requirements,” said the ministry of Finance in the 2026/27 Budget paper.Furthermore, the paper has indicated the cash balances in the GIA stood at only P2.14 billion in October 2025, compared to P2.85 billion in the same month in 2024.Meanwhile, at the currently projected deficit for the financial year 2025/26, the GIA would be fully depleted by the end of March 2026, if drawdowns continue to finance persistent budget deficits in the absence of alternative financing options.“This situation is unsustainable and underscores the urgent need for decisive and prudent fiscal policy adjustments to replenish buffers and ensure long-term fiscal sustainability,” reads part of the paper.As the current fiscal position remains under strain, with foreign exchange reserves also at their lowest levels in recent history and revenue performance, particularly from diamond sales, falling below expectations.Technocrats at the Ministry of Finance highlights that the 2025/26 financial year has underscored the urgency for strengthening fiscal resilience and diversifying revenue sources beyond traditional mineral earnings.“This suggest that in 2026/27 financial year, the strategy should prioritise on rebuilding fiscal buffers, revenue maximisation, improving expenditure efficiency, and accelerating structural reforms that support sustainable, inclusive growth.” The experts said lessons from the previous financial years highlight the need for prudent fiscal discipline, stronger prioritisation of spending, and a renewed commitment to economic diversification to safeguard the country’s long-term financial stability.“Furthermore, there is need to undertake structural reforms to reduce diamond dependency, improve project implementation and procurement to avoid budget overruns, as well as the importance of maintaining fiscal consolidation with a view to build resilience against economic shocks.”However, government is believes efforts to strengthen the private sector, improving economic competitiveness, and enhancing governance in areas like social protection and anti-corruption also remain critical.The Budget paper has announced that the 2026/27 fiscal strategy will be anchored on three critical pillars: Public Investment Management reforms, Public Expenditure Efficiency, and Revenue Maximization efforts.“This comprehensive approach aims to create a robust and sustainable fiscal framework. By enhancing the effectiveness of how public funds are invested, optimizing the allocation and use of public expenditures, and strengthening revenue collection mechanisms, the government can achieve its overarching objective of sustainable revenue generation.”

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Gov’t coffers dry up