The Botswana Congress Party (BCP) has issued a stern rebuke of the government’s recent exchange rate policy adjustments arguing that these measures are neither the most urgent nor the most consequential steps needed to stabilize and grow Botswana’s economy.

On July 10th, 2025, President Duma Boko approved new adjustments to the country’s exchange rate policies based on recommendations by the Minister of Finance and the Bank of Botswana. Notably, these include a revision of the Pula’s annual downward crawl rate from 1.51% to 2.76%, and a substantial widening of the foreign exchange trading margin from ±0.5% to ±7.5%. The Pula basket remains unchanged at 50% South African Rand and 50% Special Drawing Rights (SDR) currencies, which include the US Dollar, Euro, Chinese Renminbi, Japanese Yen, and British Pound.

What the Policies Entail

The increase in the Pula’s depreciation rate aims to enhance external competitiveness by making exports cheaper and imports more expensive. Meanwhile, expanding the trading margin intends to bolster foreign exchange reserves and facilitate the development of an interbank foreign exchange market.
The government’s rationale is straightforward—these measures are designed to improve Botswana’s economic resilience and market stability. However, the BCP’s Economic Desk warns that the potential benefits are not guaranteed and may carry adverse side effects.

Critical Analysis of the Measures

Depreciation Adjustment: While increasing the Pula’s depreciation could theoretically make Botswana’s exports more competitive, the impact on consumers and production inputs may be detrimental. Most consumer goods and essential inputs such as machinery and raw materials are imported. A weaker Pula will raise their prices, potentially leading to inflation, higher production costs, and reduced consumer welfare. The actual boost to exports and economic activity is uncertain and depends on how effectively the policy transmission mechanisms function.

Widening Foreign Exchange Margins: Although intended to stabilize reserves and develop a more efficient foreign exchange market, this move will likely increase import costs, fueling inflation and further straining household and business budgets. The measure’s success in fostering a robust interbank market remains to be seen.

Why These Are Not the Immediate Priorities

The BCP contends that these exchange rate adjustments, while significant, are not the most pressing issues facing Botswana’s economy. Instead, urgent reforms are needed to address deeper systemic challenges, including:

Fiscal Discipline: The government has engaged in costly travel, employment of political patronage, and unfunded expenditure commitments, including increased pensions and allowances, all without corresponding revenue increases. The BCP urges a halt to such fiscal extravagance to free up resources for critical needs.

Public Finances Stabilization: The government is struggling to meet obligations, risking defaults on salaries and supplier payments. The BCP calls for immediate fiscal consolidation, cutting wasteful expenditures, and ensuring the efficient functioning of public services.

Economic Recovery Plan: Nearly a year into the current administration, Botswana still lacks a comprehensive economic recovery strategy. With unemployment soaring—over 34% of working-age adults are unemployed—and many youths disconnected from employment, education, or training, urgent action is required.
Policy Clarity and Consistency: The BCP criticizes inconsistent messaging from government officials, highlighting contradictions between fiscal policy and actual spending behaviors, as well as violations of procurement laws. Clear, coordinated policy direction is essential to attract investment and restore confidence.

The BCP emphasizes that every policy decision should aim to bolster the economy’s fundamentals. The party urges the government to prioritize stabilizing public finances, curbing unnecessary expenditures, and developing a clear, actionable plan for economic recovery. Only through such decisive measures can Botswana hope to navigate current hardships and lay the groundwork for sustainable growth.