RAY OF LIGHT
Budget deficit expected to decline
For the longest time, Botswana has been battling budget deficits that have been growing over the years. But with the National Development Plan 12 (NDP 12) at hand, there is a ray of hope amid the doom and gloom as the deficit is expected to gradually decrease.
With the budget deficit for 2022/23 financial year currently standing at P7.6 billion, it is projected that the 2023/24 financial year will see the deficit reduced to the considerably lower figure of P163 million, creating an almost balanced budget.
This will coincide with the implementation of the NDP 12 as lower financing requirements are expected from the government side.
The next financial year includes a number of key government priorities which among others include: the commitment to achieve a digitalised economy catalysed by information, communication technology (ICT) innovations, value chain development through strategic sectors such as minerals, energy, tourism, sustaining livelihoods of Batswana and infrastructure development in order to accelerate economic diversification.
Director of Macro Economic Policy at the Ministry of Finance, Batane Matekane, last week told the Local Authorities Budget Pitso the next financial year, which marks the first year of the NDP12, positions Botswana at a critical juncture for fiscal sustainability.
“The budget is proposed in the midst of considerable uncertainty, posing downside risks to the domestic outlook. Therefore fiscal sustainability becomes more than necessary to underpin macro economic stability to provide financial resources to meet development needs,” she said, further noting that despite the deficits going down, government will continue to borrow locally and externally.
Previously, persistent budget deficits have increased funding requirements, resulting in depletion of Government Investment Account (GIA) over the years, limiting any possibilities of further withdrawals. As it stands, the GIA saw a tremendous growth from P4.1 billion recorded in July 2021 to P16 billion as of July this year.
For her part, Minister of Finance, Peggy Serame, reiterated the government’s commitment to fiscal consolidation measures
which is expected to help create the much needed space and restore GIA to Covid-19 pre-crisis levels.
“This includes zero-based budgeting, reducing the wage bill and rationalising some of the state-owned enterprises. Fiscal stability will imply cost containment, resource sharing and maximising and creating new sources of revenue,” she said.
Post the 2023/24 financial year, a positive budget is, however, expected with P355 million and P1.2 billion in surplus expected in 2024/25 and 2025/26 financial years. “Government financing needs are expected to remain moderate over the medium term, mainly reflecting the need to restore fiscal buffers as a precaution against future shocks, hence to accumulate net financial assets,” added Matekane when sharing the financial implications.