Bank of Botswana Governor Lesego Moseki says the recovery in foreign exchange reserves provides Botswana with some protection against external economic shocks, but warned that reserves alone cannot guarantee the pula’s resilience if commodity prices decline.
Speaking at yesterday’s Financial Stability Council media briefing, Moseki said Botswana’s foreign exchange reserves currently provide approximately eight months of import cover, meaning the country could theoretically finance its imports for that period without additional foreign currency inflows.
However, he emphasised that the long-term strength of the pula depends on the productive capacity of the domestic economy, particularly its ability to generate foreign exchange and reduce reliance on imports.
Moseki pointed to Botswana’s heavy dependence on imported goods, particularly food, arguing that increased domestic production and economic diversification are critical to strengthening the country’s external position.
Using Uganda as an example, he noted that the country’s foreign exchange reserves provide approximately two months of import cover, partly reflecting its lower dependence on imported food due to stronger domestic agricultural production.
He said Botswana must prioritise expanding local production capacity rather than relying solely on foreign exchange reserves to cushion the economy against commodity price fluctuations and global market shocks
