Botswana could be on the brink of a debt crisis within the next five to ten years, driven by escalating government borrowing aimed at covering persistent budget deficits, according to a recent analysis of the country’s public debt.
The report, conducted by local consultancy firm Econsult, warns that Botswana is grappling with a burgeoning debt problem that threatens to escalate into a full-blown crisis if current borrowing trends continue unchecked.
Econsult’s review highlights that government spending has consistently outpaced revenue, creating a persistent financing gap that fuels rapid increases in borrowing and public debt. The 2026 budget was widely anticipated to chart a course toward fiscal consolidation by trimming expenditures to align with structurally lower revenues, shrinking the budget deficit, and putting public debt on a sustainable trajectory.
“The new United Democratic Change (UDC) government presented the recent budget after more than a year in office, a period during which it had ample opportunity to fully assess the severe fiscal challenges it inherited, understand the consequences of failing to make necessary fiscal adjustments, and reform spending in a manner that supports the country’s longer-term structural reform goals,” the review states.
Yet, the report notes significant delays in implementing urgent reforms needed to restore fiscal resilience and curb the upward spiral of government borrowing and debt. “On one level, the 2026 budget recognizes the importance of fiscal consolidation and ensuring debt sustainability. But is this reflected in the actual budget plans? It seems not. The budget as presented envisages a continued high level of spending in 2026/27 (35 percent of GDP, similar to 2025/26) and a huge budget deficit (9 percent of GDP),” the authors write.
Recent projections show government spending set to rise by 7.1 percent, reaching P103.6 billion for the 2026/2027 fiscal year, up from a revised estimate of P96.7 billion for 2025/2026. Meanwhile, expected revenue for 2026/2027 stands at P77.2 billion, leading to an anticipated overall budget deficit of P26.4 billion, slightly higher than the P25.5 billion deficit projected for 2025/2026.
The latest budget figures reveal little progress in reducing government expenditure, while revenue growth remains stagnant. In the first ten months of the 2025/26 fiscal year (April 2025 to January 2026), total government revenue amounted to P59 billion, a marginal increase of 0.4 percent compared to P58.8 billion during the same period in 2024/25. Total expenditure and net lending reached P67.9 billion, a slight decline of 0.6 percent from P68.3 billion in the prior year. The resulting deficit for this period was P8.9 billion, down from P9.5 billion in the previous corresponding period.
With minimal improvement in narrowing the financing gap, government borrowing and debt levels are expected to rise substantially this year. “Public debt is projected to continue increasing sharply, requiring the lifting of the statutory limit on debt and raising questions about debt sustainability. Government is not running a primary budget surplus, or even a balanced budget, as debt sustainability would require. Ministry of Finance projections indicate primary budget deficits of 8.2 percent of GDP in 2025/26, 7.9 percent in 2026/27, and 5.9 percent in 2027/28. When combined with our higher estimates of interest payments, these will drive a rapid increase in debt (including guarantees), from 30 percent of GDP in 2024/25 to 50 percent in 2027/28—clearly not a sustainable trend,” the report warns.
While the current surge in debt does not yet constitute a crisis, the researchers stress it signals a serious problem. “There may not be a debt crisis in this period, but there is certainly a debt problem. Nevertheless, the trend is unsustainable, and it would not take long for debt to reach crisis levels at this rate of increase. With continued budget deficits of this magnitude, after a decade debt would exceed 100 percent of GDP, perhaps even sooner if government’s borrowing costs continue to rise.”
The report concludes that Botswana faces an urgent choice: halt or at least significantly slow the trajectory of mounting debt by cutting government spending and reducing the budget deficit. “Despite commitments to do so, there is no sign of this so far, with projected spending remaining at 35 percent of GDP in 2026/27, little change from an estimated 35.5 percent of GDP in 2025/26, and higher than the 34 percent of GDP recorded in 2024/25. The inevitable conclusion is that without meaningful expenditure restraint, bringing spending down below 30 percent of GDP, Botswana could face a debt crisis within the next 5-10 years,” the researchers caution.