The Bank of Botswana has published the Financial Stability Council’s (FSC) assessment that Botswana’s financial system remains stable and capable of withstanding moderate shocks despite subdued economic activity, global uncertainty and concentrated funding sources. Fiscal consolidation and budget financing arrangements have eased liquidity constraints and funding costs, although measures to address deposit concentration remain ongoing.
Banks retain strong capital and liquidity buffers, sustained profitability and low nonperforming loans. Nonbank financial institutions remain solvent, profitable and adequately capitalized. However, bank stress tests indicate that severe scenarios could cause breaches of prudential capital requirements. Slow credit growth has produced a negative credit-to-GDP gap, indicating limited risks from credit expansion. Interconnections between financial institutions and the wider economy could transmit stress, requiring surveillance that draws on data across sectors. Sovereign exposures, external risks and concentrated exposures remain areas requiring attention.
Work continues on bank recovery planning, resolution and emergency liquidity assistance frameworks to strengthen crisis preparedness. Financial integrity measures focus on combating money laundering, terrorist financing and proliferation financing ahead of the 2027 mutual evaluation. The FSC’s expanded participation includes the national coordinator responsible for these measures. A detailed assessment will appear in the October 2026 Financial Stability Report, due for publication by the end of November 2026.