10 Jul 2018

The Minister of Finance and Economic Development Mr Kenneth Matambo has apprised the media on the urgent need to review government special funds.

Addressing a press conference in Gaborone yesterday, Mr Matambo said detailed specific measures put in place to strengthen financial management of the funds.

“We are going to start the review in earnest very soon. We had to go first to cabinet to get the mandate to do this review and as I indicated I am very happy that we got the mandate to undertake this review. There are 34 of them and we have to do it with those that are administering these funds, various ministries, it might take us sometime three to four months but we will watch our progress, our intention is to finish as quickly as possible,” he said.

Minister Matambo said one of the first steps taken was to transfer all monies from commercial banks to government central account at Bank of Botswana to ensure direct administering under the ministry. He said they had observed certain weaknesses in special funds administrators of not following fund orders.

“We had assumed everyone was following the orders but now we realised that was the contrary. We are now going to supervise and call for periodic reports and submissions from administrators to track performance and ensure we make payments relevant to the purpose of establishing such funds,” he added.

He said whether abolition of  any of the 34 special funds would depend on the outcome of the review.

“I am putting this as a possibility that yes some might go but the major concern is to improve management of the funds so we avoid what has happened to the National Petroleum Fund (NPF),” he said.

Regarding the International Financial Services Centre (IFSC) framework review, Minister Matambo said government was continuing the process to remove any perception that Botswana was a tax haven.

“Here we were dealing with concerns expressed by others especially Organization for Economic Cooperation and Development (OECD) countries. The IFSC framework basically provides a lower level of tax to companies under the mandate of the IFSC. For us it is an incentive to grow the financial sector. The purpose of this lower level of tax is to provide an incentive but the OECD countries for their own reasons look at it differently, but we disagreed with them that we are not a tax haven. We do tax companies that make an income in this country. On the other hand we had to listen to what they were saying and consider it and the extent to which we can make an adjustment to the framework where necessary,” he added.

On economic performance, Minister Matambo said the February 2018 forecast was still on point.

“What happens to our economy is by and large a function of what happens in the global economy. We attended the International Monetary Fund (IMF) and World Bank annual meetings in Washington recently and we got a brief from the president and managing director of the two institutions respectively.

There was optimism that the world economy will grow and Botswana will thus benefit from that scenario. I am still keeping my fingers crossed with regards to possible drought here. If that happens it can affect the extent of the performance of the economy in relation to our forecasts. Other than that with regards to the mining sector which contributes significantly to the growth of Botswana economy, it is forecast to perform well during the course of 2018,” he said.

For her part Accountant General Ms Emmah Peloetletse said Government Accounting and Budgeting System (GABS) upgrade was necessary because the old system was outdated.

She said her department had done what it intended to do and they were impressed with the post upgrade improvements. Ends