Govt. cushions consumers against rising cost of living

Government has considered the fact that the allowances for tertiary students have fallen behind inflation in recent years.

Government this week announced a number of short measures to cushion consumers for a period of six months against rising cost of living, which is mainly caused by the runaway inflation.

On Wednesday, Finance Minister Peggy Serame said in line with the Value Added Tax Act ( Cap 50- 03), Section 78, the rate of Value Added tax ( VAT) will be reduced by two percentage points, from 14 percent to 12 percent, for a period of six months with effect from August 2022.

Furthermore, government has also taken a decision to make cooking oil and liquid petroleum gas zero- rated for VAT purposes for six months, also with effect from August 2022.

“Needless to say, I expect retailers and other traders to reduce their prices accordingly and ensure that the benefits of these measures are passed on to the intended beneficiaries, that is, households,” the Minister told lawmakers on Wednesday.

Tertiary students who have been threatening nationwide strikes, and have even petitioned education Minister Douglas Letsholathebe will smile all the way to be bank, as their allowances have been hiked. “Government has considered the fact that the allowances for tertiary students have fallen behind inflation in recent years. To compensate for this, allowances for students at local institutions will be raised by 18.5 percent with effect from 1st September 2022,” Serame announced. Adjustments will also be made to allowances to externally placed students in selected countries to reflect changes in the cost of living in those countries since the last adjustments were made, Serame told parliament adding that these short term measures will widen budget deficits. Meanwhile, government will also provide additional loan funding to Botswana Meat Commission from the Public Debt Service Fund, up to a maximum of P120 million. “This loan will be used for, amongst others, enabling BMC to catch up on payments to suppliers, and to provide additional working capital. The disbursement of these funds to BMC will be subject to firm commitment by the Commission to fulfil certain conditions,” Serame said. These include the commencement of the BMC Transition Act, which provides the foundation for the permanent removal of the BMC’s beef export monopoly, and for bringing in a private sector partner through a partial privatisation. Both of these actions will improve BMC’s efficiency and long- term sustainability. The total value of the interventions proposed, in the current financial year, amounts to P1.8 billion. Inevitably, this will increase the budget deficit. Most of this is attributable to reduced revenues as a result of the changes made, along with the additional expenditures on tertiary student allowances and lending to BMC.