Bank of Botswana defends P3.2bn government advance

The Bank of Botswana ( BoB ) has defended a P3.2 billion advance extended to government, insisting the facility does not amount to monetary financing and is fully compliant with limits set out in the Bank of Botswana Act.

The advance appears in the central bank’s latest balance sheet under “Advance to Botswana Government”. The line item was not reflected in monthly financial statements published during parts of 2024, but has featured intermittently in subsequent reports.

Responding to questions during a Monetary Policy Committee briefing, Governor Lesego Moseki said the law permits the central bank to extend temporary advances to government, subject to strict limits designed to prevent the practice from becoming deficit financing.

“Our Bank of Botswana Act allows us to lend to government, but there are restrictions around it,” Moseki said.

He said the Bank may lend up to 5 percent of average government revenues over the preceding three years, a safeguard intended to prevent what he described as monetary financing.

“Otherwise, if there were no limits, it would amount to monetary financing or printing of money,” he said.

Moseki said the facility is intended to help government manage short-term liquidity needs while preserving the Bank’s mandate of maintaining price and financial stability.

The legal basis for the arrangement is contained in Section 60 of the Bank of Botswana Act, which allows the central bank to grant temporary advances to government, provided they are repaid within six months after the end of the financial year in which they were issued.

However, Section 62 caps the combined total of advances, credit facilities and government securities holdings at 5 percent of government’s average annual ordinary revenue over the previous three financial years.

The explanation follows a review of BoB balance sheets, which show a series of fluctuating advances to government since 2025.

The facility stood at P2.5 billion in February 2025, rose to P2.87 billion in March, then declined to P370.75 million in May. It later rebounded to P2.5 billion in July, disappeared in September, re-emerged at P2.8 billion in November, and increased to P3.2 billion in December, where it remained through January, February and March 2026.

Monetary Policy Committee member Dr Pinkie Kebakile said the advances should not be interpreted as monetary financing.

“The only problem comes when that issue is viewed as monetising the government. But I can assure you that as a country we have not arrived at that stage,” she said.

Kebakile said the Bank remained committed to its mandates of price and financial stability, while continuing to operate within the legal framework governing its relationship with government.