02 Feb 2016

The 2016/2017 budget speech marks the end of the tenth National Development Plan (NDP 10), whose implementation was characterised by slow growth in both the global and domestic economies, says the Minister of Finance and Development Planning.

Delivering the 2016/2017 budget speech, Mr Kenneth Matambo said,  “this is an opportune time to reflect on our achievements during NDP 10 as well as determine how best to address the persistent development challenges facing this country such as unemployment and poverty.”

Minister Matambo further said among the achievements by government, it was the ability to support growth momentum in the domestic economy during NDP 10 despite the fact that the implementation of the plan coincided with the global financial and economic crisis of 2008/2009. 

He indicated that in the face of crisis, government demonstrated its prudent stewardship in economic and financial management and acted decisively by adopting a proactive fiscal stance to support domestic economic activities.

“As a result, the average growth in the domestic economy over the plan period is now expected to be around 4.5 per cent, compared to the initial 3.3 per cent forecast at the beginning of the plan,” said Minister Matambo. 

The use of fiscal policy to support growth was done responsibly to ensure continued macroeconomic stability; with the average accumulated budget deficit during the National Development Plan 10 plan period estimated at P4.7 billion or negative 3.1 per cent of Gross Domestic Product (GDP), compared to P31.9 billion or negative 16.4 per cent of GDP initially projected for the plan.

The minister stated that the monetary policy also remained supportive over the plan period with inflation decelerating towards the lower end of Bank of Botswana’s range of 3-6 per cent, while the exchange rate policy resulted in a stable real effective exchange rate, which was a necessary condition for promoting competitiveness of domestic industries. 

Minister Matambo further informed the national assembly that despite government’s achievements in the macroeconomic area, efforts to address development challenges facing the country was constrained by the continued weak recovery of the global economy.

“The prolonged depression of commodity prices, especially of diamonds has further weakened the domestic economic prospects. 

In addition, shortage of water and electricity, which are key inputs in driving economic activities, has also undermined domestic growth prospects,” he said.  Minister Matambo said the constraints led to a significant downwards revision of the domestic growth forecast for 2015, prompting government to adopt the Economic Stimulus Programme (ESP) as a strategy to boost growth, promote economic diversification and create jobs.  Ends