- Government debt is projected to breach the statutory ceiling within two years as foreign reserves remain broadly stable despite weaker export earnings
GAZETTE REPORTER
Botswana’s government debt reached an estimated P90 billion, or 33 percent of gross domestic product (GDP), as of December 2025, with domestic borrowing accounting for the largest share, according to the Bank of Botswana’s 2025 Annual Report.
Domestic debt stood at P56 billion, equivalent to 20.5 percent of GDP, slightly exceeding the statutory domestic limit of 20 percent. External debt was estimated at P34.1 billion, representing 12.5 percent of GDP.
The central bank said the country’s debt position could deteriorate further if fiscal deficits continue to widen over the short to medium term, increasing the risk of sovereign debt distress.
It projects the debt-to-GDP ratio to reach 38.8 percent by the end of the 2025/26 financial year before rising to 44.7 percent by the end of 2026/27, surpassing the statutory debt ceiling of 40 percent.
“Debt sustainability continues to be challenged by revenue uncertainty, fragile mineral earnings and external shocks,” the report said.
The report added that the Government has reaffirmed its commitment to prudent debt management, enhanced monitoring of short- to medium-term debt risks and maintaining its capacity to meet repayment obligations.
It also noted that sustained fiscal consolidation, stronger economic growth and structural diversification will be critical to stabilising the country’s debt trajectory over the medium term.
Reserve Position
Despite lower export earnings, Botswana’s foreign exchange reserves declined only marginally by 1.4 percent, falling from P48.1 billion in 2024 to P47.4 billion in 2025.
According to the report, the relative stability reflected a combination of external borrowing, adjustments to exchange rate parameters aimed at promoting exports and containing imports, as well as Southern African Customs Union (SACU) revenues that helped limit the drawdown in reserves.
Import cover remained broadly unchanged at about 5.5 months in both 2024 and 2025.
External Assets
Preliminary estimates showed Botswana maintained a positive net international investment position, which increased by 22.6 percent from a revised P43 billion in 2024 to P52.7 billion in 2025.
Foreign assets edged up to P198.5 billion from P195.8 billion, while liabilities declined to P145.8 billion from P152.8 billion, largely reflecting a fall in foreign direct investment.
Portfolio investments abroad rose 4.2 percent to P91.5 billion, accounting for 46.1 percent of foreign assets. Official foreign exchange reserves represented 23.9 percent of foreign assets after declining by 1.5 percent to P47.4 billion, while direct investment abroad remained unchanged at P9.8 billion.