23 Oct 2013

It is critical for government to continue exercising restraint on expenditure and borrowing as the global economy remains fragile, the Assistant Minister of Finance and Development Planning Mr Vincent Seretse has said.

Opening the Budget Pitso in Gaborone on Tuesday, October 22, Assistant Minister Seretse said allowing substantial sovereign debt could be detrimental to the broader economic performance and therefore should be avoided.

“The weak performance in developed and emerging economies is expected to reduce demand for luxury commodities, especially on diamonds, thereby curtailing growth of the mineral sector and subsequently the overall growth of domestic economy,” he said.

Mr Seretse said it was equally important for Botswana to find alternative means of generating revenues such as reducing waste, expanding the revenue base as well as ensuring efficiency and effectiveness of any form of expenditure.

The assistant minister, however, was pleased with the low inflation rate, currently at 5.6 per cent, which is within the Bank of Botswana objective range of 3-5 per cent. Subsequently, the central bank reduced the bank rate by 50 basis points to 8 per cent in August.

“Such a move is expected to encourage borrowing for investment purposes and thus stimulate growth, particularly from the private sector,” he said. Mr Seretse said the economy needed to position itself to take advantage of the relocation of Diamond Trading Company from London to Gaborone.

“We therefore need to respond positively by undertaking relevant business ventures, jewelry and other related products, to augment sustainable economic growth and diversification efforts,” he said. He also said productivity in the public service remained a challenge and it was important that the situation should improve to ensure domestic economic competitiveness.

Mr Seretse said government would continue to pursue reforms towards doing business, e-governance, re-training of human capital and privatisation of public enterprises among others. He said the government continued to create a private sector friendly environment necessary to unlock innovative and entrepreneurial ways to grow the economy.

“These are largely premised on reviewing certain acts and policies such as simplifying the tax system as well as the reduction in the bank rate,” he said.

The Budget Pitso brought together stakeholders from different sectors such as University of Botswana, Botswana Confederation of Commerce, Industry and Manpower, and Botswana Council of Non-Governmental Organisations. Its aim was to discuss the 2014/15 Budget Strategy Paper and provide a forum for discussion of national priorities to inform resource allocation in the next financial year. ENDS