PULA CHANGES TO PUSH INFLATION ABOVE BOB TARGET

Article By: Gilbert Manenye

Inflation is expected to rise above the Bank of Botswana’s target range in the second quarter of 2026, driven largely by past exchange rate adjustments and higher import costs.

According to the Budget Strategy Paper, inflation stood at 3.9% in December 2025, up from 1.7% a year earlier, due to higher utility charges, fuel price increases and the pass through from exchange rate policy changes.

While inflation remains within the target for now, the Ministry of Finance warns that pressures are building with a key factor being the series of changes to the Pula exchange rate regime by the central bank, aimed at improving competitiveness and protecting foreign reserves.

Although these measures support exporters and reserves, the Ministry has indicated that they also raise import prices, in an economy heavily reliant on imports