07 Feb 2022

 The 2022/23 budget shows an overall deficit of almost P7 billion as total revenues and grants amount to P67.9 billion against an expenditure of P74.8 billion.

Out of the P74.8 billion, about P58.5 billion is recurrent expenditure while P16.43 billion is for development.

Presenting the 2022/23 budget proposals yesterday, Minister of Finance and Economic Development, Ms Peggy Serame attributed the substantial budget deficits that Botswana had been experiencing over the years to the country’s deteriorating fiscal position and partly to the COVID-19 pandemic.

“The long-term trends show a progressive decline in fiscal revenues relative to the size of the economy, largely reflecting lower mineral revenues as the diamond industry has matured and the costs of mining have increased combined with the volatility of revenues from the Southern African Customs Union (SACU),” she said. 

 Minister Serame noted that mineral revenues and revenues from the SACU had historically accounted for almost two thirds of total revenues while domestic revenue generation from taxes, fees and charges had been relatively low.

“The result of lower mineral revenues has been a structural change in the budget,” she said.

She said the deficits were historically infrequent and would be balanced by subsequent surpluses.

“Now, budget deficits are persistent and structural, a situation that would eventually lead to an unsustainable level of public debt,” she said.

Ms Serame said the situation was unsustainable and that domestic revenue mobilisation and expenditure levels had to be addressed.

She said it required broadening the domestic revenue base by extending net lending and improving the efficiency of revenue collection.

Parliament heard that the 2022/23 deficit would be financed through a combination of bonds, treasury bills and external borrowing.

“Measures have been taken during the coming year to improve the functioning of the domestic debt market, to ensure that government can raise funds locally to meet part of its borrowing needs,” she said.

Ms Serame said government would continue to negotiate with external multilateral institutions and other lending agencies to raise loans on attractive terms.

 She promised that government would keep an eye on the level of debt to ensure it remained within the statutory limit of 40 per cent of GDP.

“I can assure honourable members that our borrowing will remain not only sustainable, and well within the legal limits set by the relevant legislation, but also responsible and channeled to national priorities to reach our national development objectives,” Ms Serame said.

On fiscal management, the minister acknowledged that the expenditure budget would always face demands that were greater than the available fiscal resources.

 However, she said public spending had to be focused on productive and prioritised activities.

“Waste must be reduced, much more attention paid to achieving value for money and accountability strengthened,” she said.

    On revenues and grants, Ms Serame said mineral revenue accounted for P24.08 billion or 35.5 per cent and non-mineral income tax was the second major source of revenue projected at P14.26 billion or 21 per cent while customs and excise revenues were expected to amount to P13.94 billion or 17.6 per cent.

     Minister Serame said most revenue sources were expected to grow during the next financial year.

    “The exception is customs and excise revenue which is set to decrease by P405 million compared to previous year due to the expected adjustments to SACU receipts following previous over-payments,” she said.BOPA