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Botswana ready to spring into budget surplus

Publishing Date : 11 February, 2019


The Minister of Finance and Economic Development, Kenneth Matambo explained that the fiscal budget deficit which has been incurred by Botswana for three financial years was a deliberate fiscal decision to stimulate growth. Currently Matambo announced that Botswana sits on a projected deficit of P7.43 billion.

However, when addressing the media after this week’s Budget Speech Matambo has announced if it goes according to plans, this financial year will be the last year of fiscal deficit. He said an intention is to have a budget surplus for the 2020/21 financial year. He said government is now generating surplus because, “we can’t go on deficit forever.”  Matambo admitted that generating deficit will be a tall order in a face of the global economy that has been growing at a snail pace affecting the mineral revenue which is the major boost to the country’s fiscal revenue.

The minister of finance told reporters that the P7.34 billion deficit will therefore be cushioned or funded by borrowing either externally or internally. As the deficit period collapses in this current budget year, Botswana will be looking to achieve a balanced or surplus budget. For Botswana to achieve a budget surplus, according to Matambo, government will have to rely on borrowing or increase of tax base. This suggests that government might increase taxes in order to achieve a surplus status.

The wished for surplus  for the next financial year surplus comes in the face of a government sailing against spending pressures which economists say comes with the elections year.  Towards the next financial year of 2020/21, which is expected to generate surplus, government would have spent almost P1.8 billion on public servants salaries which were increased for this current financial year.

The government workers salaries which were increased will cost government P900 million in two years meaning in 2020/21 this amount will be double. While many believe government increasing salaries is a sign of succumbing to pressure that comes with elections year, Matambo said government spending has never been moved by any kind of event or pressure because it is usually preplanned. He gave an example that whatever planned this year or previous years are in line with NDP 11.

“We are not under pressure because of any particular year because we are always under pressure to spend as per our fiscal policy, which is why the budget is always unbalanced. We have not felt any different type of pressure in any particular time,” said Matambo.
Observers believe that government is currently in a spending spree despite the need to be on a budget surplus next year.  

Some believe government need to increase its revenue in the mist if economic diversification fails. Government has on the other hand put a bet of P45 billion before the private sector, for economic diversification and job creation. While the mineral revenue has always been the mainstay for government revenue economist still believe such source of funding is unpredictable especially in a time of the sometimes volatile global economy.

The global economy is currently at a slow pace and risky when looking at trade tension between the two super powers of US and China-Botswana market stronghold. While tax base is the second biggest revenue source for government, it has been proved in previous years that government has not been on the winning side as money laundering, failure to collect enough tax revenue and tax evasion has always been perpetual impediments. The latest Global Financial Integrity report suggests that tax evasion culprits are reported to have used deceit to under-invoice imports in order to hide around P9.2 billion(US$885 million) from the tax man’s eye in 2015.



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