FRANCISTOWN, Botswana, April 18 — Botswana’s assistant Trade and Industry Minister Keletso Rakhudu on Thursday said the country would cut its overall import bill by 50 percent by the end of this financial year if not completely having the money circulating locally.
Addressing a business stakeholder meeting in Francistown, Botswana’s second largest city, Rakhudu said the country is seeking to cut the import bill through the recently introduced Economic Diversification Drive (EDD).
“Last (financial) year alone, the government utilized a total of 20 billion pula (about 2.5 billion U.S. dollars) on imports,” revealed that assistant minister.
Early February, the Bank of Botswana drew a total of 21 billion pula from the Pula Fund in order to meet the country’s ever spiraling import bill.
Pula Fund houses the national savings from chronological mineral exports and budget surpluses and is in the form of a long- term sovereign wealth fund managed by international fund managers which is invested in various assets.
Although the Bank of Botswana has allayed fears that the 21 billion pula drawn down of Pula Fund might have a direct impact on economy, the government has decided to take decisive action such that it would not be caught napping in future.
Rakhudu said the government’s ambition is to ensure that at least 50 percent of the import bill is spent locally. He said having money circulating locally will ensure that the local financial sector will be strong.
“We want money to be circulating locally and ensure that the banking sector will stay alive and vibrant,” said the minister.
He said the government is beating its target to raise food production locally and diversify the country’s economy away from its overreliance on mining sales in an effort to intensify efforts to diversify this diamond rich nation’s financial system.
Rakhudu said import bill reduction would result in more money circulating locally, a development that will result in a more vibrant and thriving banking sector. A vibrant and thriving banking sector means more profits for local banks, he said.
“Instead of borrowing outside, the government will decide to borrow locally because a thriving banking sector will have the capacity,” said Rakhudu.
Botswana has pursued prudent fiscal policies. As its economy rebounded from the 2009 economic downturn, aided by improved global demand for diamonds — the country’s major export commodity, Botswana government began to cut spending, aiming to narrow the budget deficit.