10 Oct 2019

Government, through the 2020/21 Budget Strategy Paper presented recently, plans to restraint its fiscal expenditure in an effort to restore the country’s fiscal position.

Presenting the strategy paper during Budget Pitso held in Gaborone, deputy secretary for macro-economic policy in the Ministry of Finance and Economic Development, Mr Kelepile Ndobano said they aimed to strengthen fiscal accountability and responsibility for targeted investment towards successful implementation of the last half of the eleventh National Development Plan (NDP 11).

During the next financial year, government would create an environment which would allow its development expenditure in the next budget cycle to focus on maintenance and consolidation of existing infrastructure, giving priority to projects offering high returns on investment.

Mr Ndobano said government had placed a moratorium on new parastatals as an effort to reduce inefficiencies on expenditure.

The presentation also highlighted other cost cutting measures such as refraining from building new offices and housing units, especially in major towns and villages as well as freezing of new manpower positions in the civil service.

Mr Ndobano said they adopted the strategy following budget deficits of P16.11 billion during the first half of NDP 11, adding that undermined the fiscal space necessary to increase development spending.

He also noted that other factors which prompted the strategy included declining mineral revenues and low investment due to global macro-economic challenges and rising trade tensions between the United States and China.

Mr Ndobano added that the medium term fiscal projections for 2020/21 budget estimates pointed to another deficit which would undermine the NDP11 objective of achieving modest surpluses or balances in the remaining three years of the plan period.

Senior policy advisor in the finance ministry, Mr Wilfred Mandlebe also said it was necessary to take a holistic and targeted investment strategy to achieve transformation of national priorities in light of the prevailing economic environment.

He said current structural reforms which included loosening of labour market rigidities, implementation of the national transformation strategy and the national spatial plan would add impetus to projected growth of 4.0 per cent in 2019, 2020 and 2021 medium term outlook.

Mr Mandlebe added that other cross cutting measure such as revamping of revenue sources were critical to avoid increases in tax.

Meanwhile, the International Monetary Fund (IMF) world economic outlook suggested that the global medium term outlook would be sluggish due to uncertainty, trade and geopolitical tension, debt and inflation risks. ENDS