03 Aug 2021

 Parliament has learnt that COVID-19 pandemic has already consumed over P3 billion in its mitigation efforts.

 This was said by Minister of Finance and Economic Development, Ms Peggy Serame in response to a question in Parliament on Monday. 

Ms Serame explained that the situation implicated prolonged budget deficits, which needed to be financed, within a limited buffer to cushion some external shocks. 

She said prior to the outbreak of COVID-19 pandemic, the Government Investment Account (GIA) had a balance of P17.8 billion but by the end of November 2020, that had plummeted to P5.6 billion. 

“The main contributor to this predicament was the poor performance of traditional revenue streams, combined with additional spending related to the COVID-19 pandemic,” she explained. 

Ms Serame further said that as stated in the budget speech earlier this year, the deficit was P21bn or 12 per cent of GDP in the 2020/2021 financial year and P6bn or 3 per cent of GDP in the current financial year, which illustrated the magnitude of the fiscal that needed to be filled. 

She added that the ministry, through this year’s financial budget, was implementing cost recovery initiatives, which would allow government to determine the cost effectiveness of services that were provided as well as operational efficiencies, that is, whether the revenues generated were commensurate with the cost of providing those services. 

That, she said was done through review of user fees and service charges. 

The minister indicated that government was aware of the financial hardships facing many families and companies due to the advent of COVID -19 pandemic, as well as initiatives that it took to cushion individuals and entities from the negative effects of the pandemic following restricted movements imposed to control the spread of the disease. 

In that regard, she said the finance ministry had made intensive assessments to determine the best criteria for revising the fees and service charges. 

As such, she said three principles were applied during the review process that included ability to pay, market prices and average inflation which were considered to be representative to all spectra of consumers of the services. 

“Our dire need for revenues today means that we cannot afford to consider at this point in time suspending the proposed user fees and service charges being contemplated,” she said. 

Ms Serame further indicated that government had to take the necessary steps to raise enough revenues to finance expenditure for social programmes and infrastructure that ensures sustainability of citizens’ wellbeing. 

“When considering revision of user fees and service charges, the plight of the ordinary Motswana first was considered and the ministry was striving to maintain a balance when making proposals for cost recovery,” she said. 

Bobonong MP, Mr Taolo Lucas had wanted the minister to outline proposals for cost recovery in Ministries of Transport and Communications, Mineral Resources, Green technology and Energy Security, Employment, Labour Productivity and Skills Development, Tertiary Education, Research, Science and Technology, Investment, Trade and Industry and Infrastructure and Housing Development. 

He also wanted to know if the minister would consider suspending all or some of the proposed cost recovery measures owing to financial hardships imposed on individuals, families and businesses by the COVID-19 pandemic and its associated restrictions. 

Mr Lucas also wanted to know if the ministry, in its proposals for cost recovery, had considered sectors that had been heavily impacted by COVID-19 as well as the impact of cost recovery measures on low income earners. Ends