The legislative framework for facili- tating and developing public debt management considerations needs to be current and all encompassing.
However, the Oﬃce of the Auditor General (OAG) highlights in its report that the Finance and Audit Act and Stocks, Bonds and Treasury Bills had not been reviewed aﬅer 10 years and seven years respectively to address current debt management principles. These include prudent ﬁnancial management practices, accountability and transparency such as timely payment of all debts and to achieve the lowest possible cost of borrowing consistent with a prudent degree of risk.
The proceeds of the Bonds and Treasury Bills are usually used to ﬁnance large and complex projects for health and education such as the expansion of the UB, BIUST and the medical school as well as to ﬁnance deﬁcits that government has incurred recently. Public debt directly impacts on the country’s economy and it needs to be properly managed to ensure that the country is not deeply indebted which may result in bad reputation of the country for further ﬁnancial assistance.
The OAG discovered that even in 2012, the public debt activities were limited to operational aspects rather than long-term initiatives. This implied that management strategic portfolio objectives were not embedded in the long-term macroeconomic objectives. However, the audit revealed that due to historic low levels of debts in Botswana, the Ministry of Finance and Development Planning had not prioritised the need to build capacity in the area; hence no debt management was developed.
Lack of debt management strategy may lead to raising inadequate levels of ﬁnancing not able to sustain public debt in a less costly manner. Tis may also result in the borrowing decisions made on an adhoc basis without consideration of government’s balance sheet. Botswana’s public debt fell to 14.4 percent of GDP in 2012, down from 17 percent in 2011, and a further decrease to 14.3 percent in 2013. In 2014, 12.7 percent is expected.