24 Feb 2021

Parliament has approved the 2021/22 budget proposals amounting to P70.61 billion, with P56.06 billion budgeted for recurrent expenditure and P14.75 billion earmarked for development.

Responding to the MPs’ debates, Minister of Finance and Economic Development, Dr Thapelo Matsheka said government had wiped off P4.8 billion in taxes after pardoning defaulters who would ‘now pay the principal amount of P3 billion.’

The minister said by increasing the income tax threshold from P36 000 to P48 000, 26 975 people were freed from tax and tha it would save them P100 million annually.

Dr Matsheka further noted that food items were zero rated from Value Added Tax (VAT).

He dismissed claims that the poor would be more affected by the two per cent increase, saying at 14 per cent it remained the lowest in the region.

The minister said government had to generate revenue for its development agenda, adding that he was confused by MPs who were against the VAT increment but called for increase in government expenditure.

He said most of the government’s revenue was financed by the Southern African Customs Union (SACU) and minerals.

He noted that they had taken a knock due to the COVID-19 pandemic hence Batswana had to dig in their pockets and come on board.

“Part of the funds from the levies would be added into the consolidated fund,” he said.

Dr Matsheka also briefed MPs on the budget processes, saying it depended on forecast revenues hence the 2020/21 budget was affected when revenues dwindled.

The budget, he said, was how government planned to spend the forecasted funds, adding that it was divided into two, recurrent and development.

He said the recurrent budget was for everyday government use and that it included public sector salaries while the development budget was for infrastructure projects.

Dr Matsheka said deficits were addressed either through tapping into the government investment account, domestic borrowing or borrowing from international organisations.

Last year Parliament approved the minister’s request to raise P30 billion through domestic bonds.

For the 2021/22 financial year, the minister said there would be a deficit of P6.03 billion and that it included VAT increments.

He said the country needed developments such as roads, schools and storm water drainage system.

He also said government empowerment schemes should target specific people, saying some people received free seeds but did not look after their fields.

He added that those with the ability to pay school fees should do so to enable government to focus on those in need.

Dr Matsheka said P15 billion of the recurrent budget was for subventions and grants.

He also noted that government spent P2 billion per month on public officer’s salaries.

He said the country could not move forward when the recurrent budget was higher than the development budget.

The minister also said government was not getting value for money, adding that funds allocated to education were not commensurate with academic performance.

On health, Dr Matsheka said the Ministry of Health and Wellness had been allocated funds for the acquisition of COVID-19 vaccines.

He dismissed reports that funds had been wasted, saying the country had a budget deficit and that government tapped into the reserves. He noted that the GIA had P5.6 billion. ENDS