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P5 billion budget deficit for 2019/20

Publishing Date : 24 September, 2018

Author : REARABILWE RAMAPHANE

The 2019/20 financial year is expected to commence on a P5.11 billion pula budget deficit, this information emerged at the Annual Budget Pitso hosted by the Ministry of Finance and Economic Development in Gaborone this week.


The forecasted budget deficit follows another one signalled by the treasury for the current financial year ending April 2019. The 2018/19 financial year commenced spending on a negative 4.5 billion pula behind proposed expenditures. The budget Pitso is an annual consultative meeting convened by the Ministry of Finance, to engage all relevant stakeholders across government and private sector on public finance matters as well as chat prospected trends for the subsequent year as far as revenue channels and prioritized government spending is concerned.


When deliberating on the Budget strategic paper finance ministry economic experts explained that the deficit mirrors total projected revenue estimation of P61.28 billion against proposed expenditure stretch of 66.40 billion. Mineral revenue is projected to contribute the largest share of revenue at P21.09 billion accounting for 34.4 per cent, followed by customs and exercise at P14.97 billion a 24.4 per cent stake. Non-mineral income tax is the third largest revenue contributor.


It was noted that to contain the deficit and ensure government continues financing key and vital expenditures the treasury will explore borrowing opportunities from available domestic and external resources base globally. Domestic borrowing would entail issuance of government debt securities such as treasury bills and long term government bonds.


When officially opening the Pitso on Tuesday, Minister of Finance & Economic Development Kenneth Matambo told attendants, amongst others high ranking government officials, captains of industries and private sector heads that the main intention of the Budget Pitso was to create a platform where concerned parties can appreciate the national budgeting process. Matambo explained that the Pitso promotes transparency, efficiency, effectiveness and accountability in the use and allocation of available national resources.  


He noted that for the past eight years the finance ministry has prepared and presented strategic budget paper for stakeholder engagement. He explained that the paper contains macro-economic developments in both global and domestic economy, fiscal outlook for domestic economy, estimates and budget priorities for the next financial year.


Matambo noted that this  year’s strategic paper as the first since ascendance of President Mokgweetsi Masisi to the helm of government enclave reflects 2019/20 financial year national strategic goals premised on key element of President Masisi ’s road map as outlined  in various platforms since becoming President of Botswana in April this year. Highlighting on macroeconomic stance Matambo observed that trade related uncertainties between key global economies in China and Unite States spills over to developing economies like Botswana.


“This uncertainties in the global market result in negative propounded externalities  to  our domestic economic corridors particularly in the mining sector ,  due  to this uncertainties in the global economy growth in our domestic macro economy remains vulnerable  and ambivalent” he said. The finance minister shared that however in this current 2018/19 financial year positive economic growth is expected especially in the non-mining sectors.


“This underscores the integral need for the private sectors in developing our economic means and revenue channels outside the traditional anchor which for years has been mineral revenue,” he said. He noted that the Domestic economy has been doing well owing to contained inflation, adding that Bank of Botswana has continued to maintain the bank rate at within its objective range with the aim of promoting the financial services sector and related sub sectors.


“Low inflation is supportive of our economic growth objective, which envisages more goods and services being produced by the private sector, and as a result increasing employment opportunities,” he said
Matambo said in the coming year government will deliberately channel more resource into infrastructure development as a key enabler of business and investment with the cardinal intension to diversify the economy form one commodity dependence.


 “Persistent budget deficit are not ideal , in pursuit  of fiscal sustainability government is committed to controlling expenditure in the medium term , we have to achieve more with limited resources , we will continue coming up with deliberate ways of raising domestic revenues” he said.


Further deliberating on national expenditures and  strategic thrust for the  2019/20 finance ministry officials  underscored that government will be centred around the broad national priorities of developing diversified sources of economic growth, human capital development, social development, sustainable use of natural resources, good governance and strengthening of national security as well as monitoring and evaluation


Ministry of Finance said government would streamline policies and regulations to improve on the business climate for private sector development within the country by continuing to invest in infrastructural development, education and training, especially technical and vocational education, to achieve sustained economic growth and employment creation.  Furthermore, government would continue to implement social welfare programmes as part of efforts to address poverty among the most vulnerable groups of the society.

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