As the country’s savings run dry and debts pile up, Government now lives quarter to quarter — borrowing to get by, delaying payments, and hoping for relief from SACU inflows. It’s a familiar struggle for many Batswana, but this time, it’s playing out at the national level.
For years, Botswana was lauded as a model of fiscal prudence, its diamond-fuelled coffers cushioning the economy from shocks and enabling public spending that lifted infrastructure, education, and health services. But those days are fast fading. With diamond revenues on a structural decline, government spending outpacing income, and the last of the country’s savings tapped out, Botswana is now living from hand to mouth — a story that rings painfully familiar for many of its citizens.
Economist Dr Keith Jefferis says the country’s new government has inherited a distressing fiscal situation: shrinking revenues, unsustainable spending, rising debt, and critically low cash reserves.
“This is only partly due to the weak global diamond market,” he wrote in his Q1 2025 report. “The more fundamental issue is an unsustainable fiscal policy over many years — one that failed to adjust spending in line with long-declining revenues.”
In plain terms, Botswana has been living beyond its means for far too long, like many of the Batswana.
The result? A national purse that is dangerously thin. The Government Investment Account (GIA), which served as a rainy-day fund, stood at just P250 million by December 2024 — a sharp fall from P8.6 billion just a year earlier, according to Jefferis. The annual budget deficit ballooned from an estimated P8.7 billion to a staggering P24.7 billion within the same period.
To plug the gaps, Government has turned to borrowing from the domestic bond market, the Botswana Public Officers Pension Fund (BPOPF), and, for the first time ever, Jefferis said, an overdraft from the Bank of Botswana. But even that has not been enough.
“It is understood that Government accumulated significant arrears to suppliers, which aren’t reflected in the official accounts,” Jefferis said. “This has led to underreporting of the actual debt levels.”
Quarter-to-Quarter Governance
As fiscal pressure mounts, Botswana’s government has begun operating on a quarter-to-quarter basis — surviving from one Southern African Customs Union (SACU) payment to the next. Jefferis said this has resulted in cash flow crises, with the government at times delaying payments to suppliers and the transfer of statutory payroll deductions to banks, unions, insurers, and medical aid providers.
“Even with borrowing, cash flow constraints remain. Government is essentially running out of money at the end of every quarter,” he explains.
The Annual Borrowing Programme (ABP), introduced in 2024, initially anticipated P13 billion in new domestic borrowing. But with the deficit far exceeding expectations, borrowing targets were missed, and the Government turned to unconventional financing measures.
Still No Course Correction
Despite the gravity of the situation, the 2025 Budget has done little to reverse the trend.
“It continues an unsustainable trajectory,” said Jefferis, pointing to what he describes as “unrealistic projections” about a recovery in mineral revenues. Spending is still set to rise, with a greater reliance on external borrowing. But even that may not be enough.
Crucially, Jefferis warns that Botswana is edging dangerously close to its statutory debt limit — and could hit it within the next year or two.
A Mirror of the People
In many ways, the national budget now mirrors the financial reality of everyday Batswana: strapped for cash, relying on credit, and hoping things will turn around soon. Households are burdened with billions in debt, and many live from paycheck to paycheck — or worse, from loan to loan.
The country’s fiscal problems are no longer abstract or confined to the corridors of power; they now manifest in delayed government contracts, unpaid suppliers, stalled public services, and rising anxiety over the economy’s direction.
As Botswana grapples with the stark choices ahead — raise taxes, cut spending, reform its economic model — the reckoning is no longer a distant prospect. It’s here.
And unless bold decisions are made soon, Jefferis said the quarter-to-quarter survival model could harden into long-term decline.
