The Bank of Botswana (BoB) delivered a record P7.3 billion transfer to government in 2025 after realisingbillions of pula in gains from selling assets held in the country’s foreign exchange reserves, but the central bank says the windfall came at the expense of future earning capacity.
Speaking at the launch of the Bank of Botswana’s 2025 Annual Report this week, Chief Financial Officer Daniel Loeto said the bank realised P5.6 billion in fair value gains after selling assets from its foreign exchange reserve portfolio to provide foreign currency liquidity to the economy.
“We sold stock and were able to make profit in selling the stock to provide liquidity to the economy,” Loeto said.
The proceeds, together with profits generated from foreign exchange transactions, enabled the central bank to make the largest transfer to government in its history.
Loeto said the Government received P7.29 billion in 2025, up sharply from P4.10 billion the previous year. However, he cautioned against viewing the record payout as a sign of stronger underlying earnings.
“This is the largest single amount that was ever transferred to Government. However, we are not celebrating this because we have sold our stock. Therefore, it is not available for us to generate money,” he said.
The Bank’s financial statements show that equity holdings in the Pula Fund — the long-term investment tranche of Botswana’s foreign exchange reserves — fell from P25.14 billion in 2024 to P13.87 billion in 2025.
The notes to the financial statements show the Pula Fund recorded realised fair value gains of P5.92 billion during the year, while net realised fair value gains increased from P3.85 billion in 2024 to P5.61 billion in 2025.
The reduction in reserve assets also weighed on investment income.
Dividend income from foreign exchange reserves declined from P516.7 million in 2024 to P238.9 million in 2025, while total interest and dividend income fell from P1.7 billion to P1.4 billion.
“There was P1.4 billion earned in interest and dividend income compared to P1.7 billion in 2024. And again, when you are holding less assets, you expect to earn less amounts in them,” Loeto said.
The central bank also generated P1.5 billion in profits from foreign exchange transactions during 2025, compared with P32.6 million the previous year.
Loeto attributed the increase to wider exchange rate trading margins introduced during the year.
“The margins on that mid-rate were widened during 2025 and by widening those margins to try and preserve the reserves, we incidentally then made P1.5 billion. That was never the intention but that’s what happened,” he said.
Overall, BoB reported net income of P5.25 billion in 2025, down from P5.78 billion in 2024.
Loeto said unrealised market losses and unrealisedcurrency gains were adjusted in line with the Bank’s accounting policy, leaving P7.65 billion available for distribution.
Of that amount, P7.29 billion was transferred to Government, P211.6 million was transferred to the Fair Value Revaluation Reserve after unrealised market losses exceeded the reserve balance, while P150 million was retained to help fund the Bank’s planned investment in the National Retail Payment Switch.
Foreign exchange reserves declined from P48.1 billion at the end of 2024 to P47.4 billion at the end of 2025.
According to Loeto, “the marginal decrease was mainly due to the net effect of the bank continuing to provide foreign exchange to the economy.”
Despite the decline, he said reserves had recovered to P58.4 billion by June 2026, equivalent to 6.7 months of import cover, up from 5.5 months at the end of 2025.
However, Loeto warned that Botswana must continue rebuilding its foreign exchange buffers by diversifying the economy.
“The country needs to do all in its power to diversify the economy and rebuild the buffers to levels that would enable the country to deal with future challenges like droughts, international financial crisis, or pandemics,” he said.
He cautioned that future shocks would not wait for Botswana to replenish its reserves.
“When are we getting the next pandemic? Are we assuming it will wait for us to accumulate enough reserves to be able to deal with it should it happen? No, it doesn’t normally happen.”
Loeto also highlighted the sharp decline in the Government Investment Account, which held more than P30 billion in 2017 but had fallen to P846 million by the end of 2025.
He said the balance had recovered to about P1.2 billion as of the close of business on Monday this week, although it had already declined from its level the previous Friday.
