07 Feb 2022

The 2022/23 financial year marks end of the National Development Plan 11 (NDP 11).

 This development plan, the Minister of Finance and Economic Development, Ms Peggy Serame, said,  was faced with fiscal challenges that resulted in budget deficits.

Presenting the budget speech in Parliament today, the minister said economic growth in the first half was robust, averaging four per cent per year.

“However, this was not sufficient to create enough employment opportunities for the growing labour force,” she said.

The minister said unemployment rose from 17.5 per cent in 2015/16 to 22.2 per cent in the first quarter of 2020 and reached 26 per cent in the fourth quarter of 2021.

Ms Serame said the COVID-19 pandemic impacted on the economy, resulting in large budget deficits.

“These are now forecast to total P26.6 billion over the 2020/2021 and 2021/22 financial years, compared to a surplus of P7.9 billion originally projected in NDP,” she said.

The deficits, the minister said, were funded through drawing down from government reserves as well as domestic and external borrowing.

During NDP 11, Botswana’s sovereign credit rating was downgraded by Moody’s and Standard and Poor’s by one notch.

“Nevertheless, both agencies have still given Botswana investment grade ratings, the only country in Sub-Saharan Africa to have such a thing,” she said.

Botswana was also grey listed by the Financial Action Task Force (FATF) when the country had deficiencies in its legal and operational framework with regard to anti-money laundering and countering the financing of terrorism.

FATF lifted the grey listing in October last year and Minister Serame announced that the European Commission had determined that Botswana would be removed from a blacklist of high risk countries.

Minister Serame said the economy needed deep structural reforms to achieve growth and transformation. “The structural reforms needed to increase the growth rate, boost job creation, improve productivity, reduce poverty and inequality were prioritised for the second half of NDP 11 and beyond,” she said.

She said the country continued to have a narrow export base that must be diversified and expanded.

“We have an external imbalance with more imports than exports, resulting in persistent balance of payment deficits,” she said.

The minister said Botswana’s fiscal revenue base remained concentrated on external sources, minerals and Southern African Customs Union (SACU) with inadequate domestic revenue mobilization and high levels of spending, and structural budget deficits.

She further decried the weak implementation of programmes and projects, giving examples of the envisaged privatization of Air Botswana and Botswana Meat Commission (BMC).

The country has 13 more years, or two more NDPs, to achieve Vision 2036.   ENDS