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The country’s official foreign reserves, managed by the BoB, fell to P18.4 billion between March 2024 and March 2025, triggering concerns about the country’s ability to pay for its imports, whilst also fuelling growing anxiety about the value of the pula.
The Bank of Botswana (BoB) has increased its minimum threshold for trading foreign currency with commercial banks from USD1 million to USD 5 million. It also increased the costs of accessing the facility, as it fights to preserve the official reserves from the prolonged diamond slump.
The country’s official foreign reserves, managed by the BoB, fell to P18.4 billion between March 2024 and March 2025, triggering concerns about the country’s ability to pay for its imports, whilst also fuelling growing anxiety about the value of the pula. The BoB also raised its trading margin used for foreign exchange transactions to banks, from ± 0.5 percent around the central rate to a margin of ± 7.5 percent. The BoB increased the margin from 0.125 percent to 0.5 percent in January.
Botswana’s foreign exchange reserves have experienced a notable decline, falling to 48.5 billion pula (approximately USD 3.6 billion) at the end of April. This represents a 31.3% decrease compared to the 67.4 billion pula held in April of the previous year. The decrease is primarily attributed to falling diamond revenues, which have impacted the government’s budget and the Bank of Botswana’s ability to accumulate reserves.
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Declining diamond revenues have been a major factor in the reduction of the country’s foreign reserves response to the declining reserves and liquidity shortages, the Bank of Botswana has taken steps, including increasing the pula crawl rate, widening the trading margin for commercial lenders, and extending the tenor of repurchase operations.
