03 Feb 2019

The Minister of Finance and Economic Development, Mr Kenneth Matambo, will today deliver the 2019/20 budget speech.
Government has forecast a budget deficit for the 2019/20 financial year.

Finance ministry officials previously said government had several options, one of them being to withdraw from the government investment account and the other through loans.

As for loans, the ministry warned that the country should avoid the debt trap experienced by other countries, hence the debt ceiling being limited to 40 per cent of GDP; 20 per cent internationally and locally.

In the 2019/20 budget strategy paper, Mr Matambo, said the national debt stood at 15.1 per cent, far below the 40 per cent ceiling.

Consequently, some economists said, looking at the amount of foreign reserves, government did not have to source funding for projects, adding that the anticipated salary increment should not be covered through a loan because that would be unsustainable.

The deficit would be expected to increase following the anticipated significant increase of public sector salaries.

This, however, would be in line with the National Development Plan (NDP) 11 that forecast deficits for the first three years of the plan, running from 2017 to 2023.

For the plan period, revenue base was expected to remain relatively unchanged, dominated by mineral and customs and excise and government acknowledged the challenges of narrow revenue base.

Total revenues were estimated to be P52.76 billion at the beginning of the plan period, and are expected to grow at an average annual rate of 6.7 per cent to reach P70.78 billion by 2022/23.

Total revenues for the entire plan period were expected to reach P365.08 billion with mineral revenue projected to contribute between 32 per cent and 36.2 per cent of the total revenues while non-mineral revenues would contribute between 63.8 per cent and 68 per cent.

As for total expenditure and net lending, it is expected to amount to P364.03 billion, against a resource of P365.08 billion during NDP 11.
 

The deficit was however expected to decrease with a modest surplus of P711 million anticipated for the 2020/21 fiscal year, followed by a relatively significant surplus of P7.2 billion and P11.6 billion during the final two years of the plan, respectively. A small cumulative surplus of P1.1 billion was projected by the end of the plan.

Already, p government expected the 2019/20 financial budget to run into a deficit, according to the budget strategy paper presented last year.
University of Botswana senior lecturer in the department of economics, Mr Gaotlhobogwe Motlaleng, said he did not have a problem with the deficit, as long as its source was known and could be corrected.

He said previously, the government enjoyed budget surplus emanating from unspent funds due to projects, which were not implemented, resulting with the money returning to government coffers.

Mr Motlaleng said the country was also bound to face deficit since some projects were not completed on time, resulting with cost overruns.

While some expected an expansionary budget given that this was the year of elections, he said Botswana had a mature democracy, therefore did not foresee huge spending.

Furthermore, he called for completion of development projects introduced during the 2018/19 financial year, saying introduction of new projects while others were not concluded had proved problematic.Ends