What’s in the briefcase?

Experts anticipate a P10.4 bn deficit

The Minister of Finance and Economic Development, Peggy Serame will present the 2022- 23 national budget speech next week Monday the 7th of February.

This will be historic in many respects as it is not only her first since taking over at the helm of the Ministry, but marks the first national budget speech ever to be presented by a woman.

However, the real question is whether the anticipated budget will address bread and butter issues that Batswana are currently worried about.

Hopeful as the nation remains, and although the speech remains a closely guided secret, the answer lies within the official document - Budget Strategy Paper ( BSP).

The BSP was made public through different platforms the most prominent being a Budget Pitso late last year, as well as the briefing of legislators.

The BSP is prepared annually since its inception in 2010, to facilitate informed discussions when the government is preparing the annual national budget.

It serves as a key instrument under the medium- term budgetary framework, outlining the aggregate revenue and expenditure envelope and projections.

Further, it presents the Medium- Term Fiscal Framework ( MTFF), which helps to ensure overall fiscal discipline through cautious spending, and that resources are spent effectively and efficiently.

The BSP is used to enhance understanding amongst stakeholders of the broader macro- fiscal issues that guide both the budgeting process and the prioritisation of budget allocations, and also helps to bridge the gap between public expectations, and what is fiscally attainable given available resources.

PRIORITY

If the BSP and current estimates are anything to go by, the budget will put more emphasis on saving lives since the outbreak of the COVID- 19. The nation can also expect at least a P10.4 billion deficit for the 2022 / 23 budget.

The overarching set of national priorities and strategic objectives was laid out in the Mid- Term Review ( MTR) of NDP 11, and the accompanying Economic Recovery and Transformation Plan ( ERTP).

Since the approval of the MTR and the ERTP by Parliament in September 2020, the economic and social environment has been overshadowed by the impact of COVID- 19, which has been prolonged beyond the expectations of many, when the pandemic was first announced.

GRANTS

The preliminary outturn for 2020/ 2021 indicates that total revenue and grants stood at P51.25 billion, which is P2.9 billion higher than the revised budget of P48.33 billion presented in the February 2021 budget speech.

The significant difference between the preliminary budget outturn and the revised budget is largely driven by mineral revenue, which accounted for P9.56 billion, compared to the revised budget figure of P6.56 billion.

Customs and excise revenue amounted to P16.46 billion, slightly lower than the revised budget figure of P16.50 billion. Contrary to expectations, given the outbreak of COVID- 19 and measures taken by the government to defer tax payments by domestic companies during the last half of the 2020/ 2021 financial year, non- mineral income tax amounted to P12.49 billion,

GROWTH

At some stage, the economic growth was projected to rebound in 2021/ 22, based on the anticipated continued recovery of the diamond industry, improved global economic activity, and trade, complemented by the continued roll- out of vaccines in Botswana, and the impact of interventions such as the Industry Support Facility, geared towards stimulating economic activity.

Positive prospects anticipated in 2021 after growth of 0.7 percent was registered during the first quarter of the year. GDP growth was projected to reach 9.7 percent in 2021 as a whole.

Further ahead, the economy is projected to grow by 4.3 percent and 4.2 percent in 2022 and 2023, respectively. Mining sector growth is anticipated to rebound to 33.9 percent in 2021, before moderating to 3.5 percent and 2.0 percent in 2022 and 2023, respectively.

The recovery in the diamond sector is supported not just by improved demand for diamonds, but also by higher diamond prices, which have recovered strongly since the beginning of 2021.