Figures provided by the Bank of Botswana (BoB) during a recent media briefing indicate that while the reserves are recovering, they are still below the healthier levels seen in the years before the onset of the COVID-19 pandemic.
As measured by months of import cover, the July level of foreign reserves represents approximately 9.7 months, up from seven months at the end of last year when the reserves were measured at P54.5 billion.
The central bank is required to keep a minimum of six months of import cover in the reserves. BoB officials said the recovery seen this year had been helped by strong Southern African Customs Union inflows in the first and the second quarter.
By comparison, the reserves decreased by 2.6 percent last year, from P56 billion to P54.5 billion, despite strong diamond exports for the year, as Debswana notched up record sales of P56 billion.
The dip in the reserves was however due to volatility in the markets where the funds are invested. Central bank officials said the volatility resulted in unrealised losses of P8 billion, with global bond markets in particular experiencing returns three times worse than their all-time low dating back to the year 1803.
Unrealised losses mean that the book value of the reserves fell due to the valuation of the assets, but the BoB did not experience an actual loss of P8 billion as it held onto and did not sell the assets.
For the assets it traded last year, the BoB recognised a loss of P36.6 million, compared to a gain of P3.1 billion in 2021.
