31 Jan 2021

A nation weighed down by the economic effects of the COVID-19 pandemic will this afternoon be listening intently as Minister of Finance and Economic Planning, Dr Thapelo Matsheka presents the 2021-22 budget.

With major contributors to the national treasury such as diamonds and tourism having experienced a sharp decline since Dr Matsheka delivered his maiden budget speech last February, this will be a budget of uncertainty.

Measures instituted  to curb the spread of the pandemic, including lockdowns, curfews and restrictions on domestic and international travel inadvertently had an adverse effect on domestic businesses, jobs and household incomes.

The nation will therefore be hoping for relief measures and government plans to  get the country out of the current economic quagmire.

Last year’s budget highlighted government’s transformation agenda and Vision 2036 aspirations of attaining high income status.

In his speech, the minister had noted growth in the non-mining sector with sectors such as transport and communications, trade, hotels and restaurants as well as finance and businesses having recorded the fastest growth.

But Minister Matsheka had stressed the need for more comprehensive diversification achievable through accelerated economic growth.

That 2020/21 budget identified four critical pillars as key for transformation-promotion being export-led growth; more efficient government spending and financing; building human capital and provision of appropriate infrastructure.

But just as the 2021-22 financial year was setting in, COVID-19 pandemic broke out forcing government to focus resources on fighting the public health crisis and mitigating its economic effects on individuals, households and businesses.

Interventions included P2.4 billion for combating COVID-19, a wage subsidy to assist businesses to pay employees, a loan guarantee scheme for businesses and food packages for most economically affected households.

Parliament also approved the Economic Recovery and Transformation Plan (ERTP) through which an Industry Support Fund (ISF) was instituted to assist businesses stay afloat and retain employees.

ISF offers soft loans to the informal sector, small, micro and medium enterprises (SMMEs) as well as large corporations in various sectors including tourism, hospitality, the services sector, manufacturing, agriculture and retail.

In his 2020 State-of-the-Nation Address, President Dr Mokgweetsi Masisi revealed that the thematic areas government would be focusing on included the economy and employment, social upliftment, sustainable environment, governance, peace and security.

As a budgetary response to the pandemic, government undertook a reprioritization process, with some of the initially budgeted for projects having to make way for high priority developments.

Dr Matsheka told Parliament last September that some of the key projects to be implemented in the remaining NDP 11 period would include upgrading strategic transport links such as the Francistown-Nata-Mohembo road, A1 to dual carriageway and Martin’s Drift-Palapye Road.

Another key infrastructure development was a railway line linking Mmamabula with Lephalale in South Africa.

The expansion of agriculture covering beef, dairy production, small stock, horticulture and farming were also identified as important.

With micro and macroeconomic revenue streams having shrunk in the 2020/21 financial year, a downward trend in both the recurrent and development budget is anticipated.

The burden of dealing with an unprecedented health crisis, including the need to finance the procurement of a vaccine and further cushion businesses and households from the economic effects of COVID-19 could be significant in a budget of uncertain times. ends