Botswana’s fiscal position improved markedly in the 2025-26 financial year. Whether that improvement reflects genuine budgetary discipline or a fortuitous windfall is a more complicated question.
Financing-flow data indicate that the government recorded a deficit of P13.9 billion, equivalent to about 4.9% of GDP. That is substantially lower than the P25.5 billion deficit projected when the 2026 Budget was presented in February, offering some relief to policymakers grappling with widening fiscal pressures in recent years.
The narrower deficit has clear benefits. It reduces the government’s borrowing requirements, eases pressure on public finances and helps replenish the Government Investment Account (GIA), the state’s principal cash reserve.
Yet economists caution against reading too much into the headline figure.
In its latest quarterly review, economic consultancy Econsult argues that much of the improvement was driven not by structural fiscal reforms but by an unusually large dividend payment from the Bank of Botswana (BoB). Excluding the P7.3 billion dividend received from the central bank, the deficit would have amounted to P21.2 billion—still lower than the revised budget estimate, but by a far narrower margin.
The distinction matters. Temporary gains can improve the appearance of fiscal health without addressing the underlying imbalance between government revenues and expenditure.
For Dr Keith Jefferis, Econsult’s Managing Director and a former government financial-policy adviser, the answer is crucial. If the entire P4.3 billion improvement beyond the central-bank dividend came from spending restraint, it would represent savings equivalent to roughly 4.4% of total budgeted expenditure—a meaningful sign of fiscal consolidation.
“If we exclude the BoB windfall of P7.3 billion, the deficit would have been P21.2 billion,” Econsult noted. At present, however, it remains unclear how much of the remaining improvement resulted from higher revenues and how much from lower spending.
For Dr Keith Jefferis, Econsult’s Managing Director and a former government financial-policy adviser, the answer is crucial. If the entire P4.3 billion improvement beyond the central-bank dividend came from spending restraint, it would represent savings equivalent to roughly 4.4% of total budgeted expenditure—a meaningful sign of fiscal consolidation.
Even so, he argues that more remains to be done.
“However, the Ministry of Finance still needs to bear down more strongly on spending across the whole of government so as to achieve budget sustainability,” he said.
The central bank’s unusually large contribution stemmed from exceptional circumstances. As Botswana drew down part of its foreign-exchange reserves, the Bank of Botswana realised gains from the disposal of financial assets. Additional profits were generated through foreign-exchange trading following the widening of the trading spread in July. Together, these factors boosted the bank’s earnings and enabled a much larger dividend payment to government.
Such revenues are inherently difficult to forecast. As a result, budget projections typically assume no dividend from the central bank. Any payment received therefore arrives as an unexpected bonus rather than a dependable source of revenue.
The effect of that windfall was particularly visible in the Government Investment Account. Econsult noted that the GIA balance rose sharply to P9.2 billion in March 2026 from just P0.6 billion a month earlier, reversing a years-long decline in the government’s cash reserves.
The increase appears dramatic, but economists caution that year-end balances can be misleading. The GIA often receives significant inflows at the close of the financial year, particularly when the central bank distributes dividends following the completion of its own accounting cycle.
“In fact, the GIA balance at the end of the financial year may not be a very representative figure for the GIA over the year as a whole,” Econsult observed. The scale of the recent windfall illustrates the point. Government received P3.2 billion from the Bank of Botswana in 2024/25. A year later, that figure more than doubled to P7.3 billion.
