27 Sep 2017

The Ministry of Finance and Economic Development has projected a budget deficit of around P8 billion or 0.4 per cent of Gross Domestic Product (GDP) for the 2018/2019 financial year.

Delivering the keynote address at the general stakeholders Budget Pitso Tuesday, finance and economic development minister, Mr Kenneth Matambo said government had been running a series of budget deficits in the past years primarily due to continued slow growth in the revenues and increased expenditure pressures.

Mr Matambo explained that the fiscal situation, however, was that growth in total revenue had been restrained by relatively weak commodity prices.

Thus, he emphasised the need to apply strict fiscal disciple throughout the public sector if government was to contain the expected budget deficits in the medium term, given the constrained resources envelope.

Mr Matambo also warned against misuse of resources hence encouraged the citizenry to efficiently and effectively deploy government limited resources to provide the necessary economic infrastructure needed for growth and basic social services.

Government, he said would closely monitor expenditure during the 2018/2019 financial year to ensure good value for money.

“The projected global growth rates for 2017 and 2018 although higher than 2016 are below the pre-crisis averages, especially for most advanced economies and for commodity-exporting emerging and developing economies,” he said.

As such, he said to avoid being caught up in vicious circle of deficits and debt, there was need for continued focus on prudent management of expenditure in order to achieve goals envisioned under national priority areas identified in the  National Development Plan (NDP ) 11.

As articulated in NDP 11, he said government was still tackling the problem of reducing or eliminating abject poverty, creating sustainable employment opportunities and improving income inequality.

“Therefore government is challenged to have a budget which will provide for better infrastructure and stimulate economic activities,” he added. On the domestic front, Minister Matambo highlighted that the domestic economy had rebounded to register a positive growth rate of 4.3 per cent in 2016, after experiencing mild recession in 2015.

The growth momentum, he said was anticipated to continue in 2017 and 2018 as the economy was expected to register a growth rate of 4.7 per cent and 5.3 per cent respectively, adding “the growth rate will largely be supported by the services sector.”

Further, he indicated that the inflation rate had been stable and projected to remain as such in the medium term, within the Bank of Botswana objective range of three to six per cent.

Notwithstanding the inflation rate stability, Minister Matambo cautioned that the rebound in commodity prices and food prices posed upside risks to the inflation outlook. Ends