24 Apr 2020

The Ministry of Finance and Economic Development has forecast negative economic growth for the 2020-21 financial year. As such, the national budget that was approved by Parliament in February would have to be revised owing to sluggish economic activity caused by the COVID-19 pandemic,.

The Minister of Finance and Economic Development, Dr Thapelo Matsheka, revealed this when addressing a press conference in Gaborone today (April 24). He said government now needed to re-prioritise expenditure and spend more on certain priority areas so as to fight the pandemic.

Areas such as public service salary increment as well as some conferences and meetings would have to be set aside until such a time when the economy would be in a more suitable position to accomodate them, Dr Matsheka revealed.

Extenuating economic factors borne out of the current climate forced this move, Dr Matsheka explained. Instead of the anticipated economic growth, the country’s economy was likely to contract and the mainstay of the economy, the mineral sector, would also be earning far less than projected.

With developed and emerging markets that trade with Botswana in areas such as mining and tourism also hard hit, the country would now be earning less revenue than had been projected, which would necessitate that the country scale down on some projects.

Various key sectors of the economy would face significant reduction in trade, with the mining sector experiencing a 33.3 per cent contraction, the hotel and hospitality industry 32 per cent, manufacturing 10 per cent with the transport and communications experiencing a 4.l1 per cent downturn.

The national budget had anticipated P62.4 billion worth of revenue but owing to the significant reduction in trade, the ministry now forecast that this amount would only be P48 billion. The minister said the expenditure projected at 67 billion would go down to P59 billion and the budget deficit was likely to double to P10 billion from the projected P5 billion.

This necessitated the reorganizing of the budget to focus on priority areas. Dr Matsheka state that the COVID-19 Relief Fund currently had P2 billion from the government plus P60 million contributed from the private sector.

This would fund COVID-19 relief in terms of wage subsidy, tax holidays, loans, strategic reserves of basic items such as food and fuel, medical supplies, food hampers for the poor as well as preparing psychological support for people during the period of the pandemic.

In terms of the wage subsidy, for the month of April, 12 440 applications were received, 12 413 were approved amounting to over P233 million, with 165 681 employees to be paid for the month of April.

For food hampers, over P114 million was approved for the Ministry of Local Government and Rural Development to roll out food hampers for the month of April and a further P26 million had been spent on the recruitment of temporary social workers and coordinators to assist with the programme.

A further P2.4 billion request from the Ministry of Health and Wellness had been made in order to fight the COVID-19 pandemic and the two ministries were now working with Ministry of International Affairs and Cooperation  as well as the Chinese embassy with a view of procuring the necessary products in that regard. ENDS