31 Jan 2016

The Minister of Finance and Development Planning, Mr Kenneth Matambo, will today present the 2016/17 budget proposals before Parliament.  

A press release from Parliament indicates that the budget session or officially, the Second Meeting of the Second Session of the Eleventh Parliament starts on February 1 and is expected to end on April 8.

The nation waits to hear more about the Economic Stimulus Programme (ESP) .

While economic experts said they expected the minister to elaborate further on the amount to be used and how the programme would be funded, entrepreneurs especially contractors would be eyeing a piece of the national cake.

However, some analysts warned that the ESP, although a good initiative in curbing unemployment, did not provide long term solutions.

Tis came at a time when the economy was experiencing difficulties emanating from international low commodity prices especially diamonds and copper.

Already, a number of mining companies felt the heat with Debswana placing Damtshaa mine under care and maintenance while BCL mine was allegedly in trouble.

During the 2015/16 national budget, the minister said the economy was expected to register a growth of 4.9 per cent during the year driven mainly by non-mining sectors.

The minister presented an overall expenditure and net lending of P54.15 against projected revenues of P55.38 billion resulting with a surplus of P1.23 billion.

However, there were shocks during the year and according to Statistics Botswana, the economy as measured through Gross Domestic Product (GDP) declined by 3.5 per cent during the third quarter of 2015 compared with an increase of 4.0 per cent accrued in the same quarter in 2014.

The decline was mainly attributed to mining, water and electricity and agriculture, which fell by 40.6, 114.9 and 0.7 per cent respectively.

These provided a challenging environment for the 2016/17 budget especially as mining revenues provided the largest source of government revenues.

An economic review from Econsult stated that the original P1.2 billion surplus envisaged in the 2015/16 national budget had deteriorated and the deficit had been mainly funded by drawdowns from government deposits at the Bank of Botswana, which fell by P41.7 billion to P37.9 billion between April and September 2015.

The Budget Strategy Paper presented towards end of last year also indicated that the revised estimates for 2015/16 showed a budget deficit of P4.03 billion or minus 2.6 of GDP although this was attributed to additional amounts needed to cover public salary adjustment and drought relief measures.

According to Econsult, the prospect of a second large budget deficit limited the government’s room to manoeuvre on the spending front.

During the presentation of the Budget Strategy Paper, officials from the Ministry of Finance and Development said should there be any deficit, it would be funded through domestic borrowing. Ends