The government sent a P2.6 billion loan request to the World Bank before it was passed for approval by parliament. The World Bank has acknowledged this, telling The Business Weekly & Review that it “is aware that the Minister of Finance is about to seek final internal approval of the loan by the Botswana Parliament”.
There was confusion early this month after the World Bank publicly announced that it had approved the loan, with some people saying it ought to have been the government announcing the deal, especially that negotiations were still underway.
As finance minister Peggy Serame revealed a week ago, the government still has to interrogate the guidelines and obtain approval. “I will be bringing it before Parliament this July,” she was quoted in the media as saying “Remember it is Parliament that has to approve any borrowing that feeds into our national budget needs.”
The Governor of the Bank of Botswana, Moses Pelaelo also has stated that the central bank was not aware of the loan. However, he was quick to say he hoped government would communicate.
In an interview with The Business Weekly & Review this week, the Resident Representative of the World Bank in Botswana and its Special Envoy to SADC, Guido Rurangwa, said the loan would be disbursed once the loan agreement had been jointly signed by the Minister of Finance and the World Bank after Botswana’s final internal approvals have been obtained.
Rurangwa explained that loan negotiations occur towards the end of the loan preparation process. For this loan, negotiations took place in April/May 2021 and were completed during the second week of May but the joint preparation of the loan started immediately after the World Bank received the request in late 2020.
“The World Bank Board approved a $250 million development policy loan to support Botswana following a loan request made by the government during the last quarter of 2020 and after a Government-World Bank joint preparation of the operation that lasted about six months,” said Rurangwa, adding that “it cannot prepare an operation/loan to support a country without an official request by the government of the country”.
He emphasised that “a formal letter is always required from the country’s government”. Rurangwa said the following steps are required before a World Bank loan is approved by the World Bank Board and disbursed to a country:
The country’s government sends a loan request letter to the World Bank.
A joint Government-World Bank technical team prepares in detail the operation to be supported by the loan, a process that can take several months.
The Government and the World Bank finalise loan documents, negotiate and agree on loan terms.
The World Bank Board approves the loan.
The Government obtains final approval by the Parliament.
The Government and the World Bank sign the loan agreement.
Disbursement of the loan to the country’s treasury can proceed.
In the case of the $250 million loan recently approved for Botswana, Guido told The Business Weekly & Review that all these steps were followed and that the first four had already been completed.