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World bank to the rescue

World bank to the rescue
SEALED: Minister Serame and World Bank Country Director, Marie Francoise Marie-Nelly signing policy loan

P2.8 billion loan to address Covid-19 effects and support private sector

Following approval of the Loan Authorization Act 21 of 2021 by the National Assembly, the Ministry of Finance and Economic Development of Monday signed a loan agreement amounting to US$250 million (P2.8 billion) with the World Bank.

The loan, which has a 10 years maturity period inclusive of three years grace period, will go towards supporting the government in responding to the COVID-19 pandemic, strengthening private sector development and green recovery.

“This is the first Budget Support loan that the government of Botswana has secured from the World Bank, as previous loans have been project loans,” said the Finance Minister, Peggy Serame.

The World Bank has- since Botswana attained Independence 55 years ago, extended financial assistance to the country, initially through the soft-lending window of the International Development Association.

Botswana’s current outstanding loans to the World Bank include US$50 million for Botswana National HIV/AIDS Prevention Support Project; US$42 million for Morupule B Generation and Transmission; US$186 million for Botswana Integrated Transport Project; and US$146 million for Botswana Emergency Water Security and Efficiency Project.

The terms of this loan include a 0.25 percent front-end fee which will be paid from the loan proceeds; a 0.256 percent commitment fee on undisbursed balances and a total interest rate of 0.68 percent.

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Serame said she was hoping for quick disbursement of the loan to support the government’s efforts to save lives by funding the COVID-19 related expenditures, especially vaccine acquisition, and to support the implementation of projects and programmes to support domestic economic recovery.

World Bank Country Director, Marie Francoise Marie-Nelly said while Botswana enjoys prudent economic management, along with democratic governance, respect for human rights, the country still faces some challenges.

“There are still some challenges regarding inequality, unemployment, and economic diversification as the economy is still based on the extraction of diamonds. In addition, we have challenges of climate change and now COVID-19,” said Marie-Nelly.

Marie-Nelly stressed the Bank has aligned Botswana’s repayment period to its overall debt profile which she said by choosing a shorter repayment period, Botswana is saving at least US$24 million.

“We are signing the first-ever policy loan, we have had investment loans which has come at the right moment to help Botswana to respond to the COVID-19 pandemic for the short term needs and also to start rebuilding for post-COVID-19.”

She said this policy loan allows Botswana to facilitate public-private partnerships in areas of energy production for local and export markets.

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