Africa-Press – Botswana. Optimism hangs in the air as the day set for the presentation of the 2023/24 financial year budget proposals by finance minister Ms Peggy Serame approaches.
Monday next week will also mark the opening of the 2nd meeting of the 4th session of the 12th Parliament.
As indicated by the recently released 2023/24 Budget Strategy Paper, which feeds into the budget proposals, Minister Serame government is raring to reduce deficit through reforms that will ensure recovery from COVID-19 effects and those resulting from the Russia-Ukraine conflict.
The strategy suggests five national priorities of digital transformation, business environment reform, infrastructure development, value chain development and sustaining livelihoods.
The latest Statistics Botswana GDP estimates indicate that the economy, driven by continued strong performance in both the mining and the non-mining sectors, grew by seven per cent year-on-year during the first quarter of 2022.
“Overall, the economy is projected to grow by 4.2 per cent in 2022, before moderating to 4.1 per cent in 2023. Despite the positive growth rates, output is projected to remain slightly below potential, at least until 2023,” says a Statistics Botswana report.
Economists however warn there is urgent need to rein in debt and reduce deficit.
“It is worth noting that persistent budget deficits over the past years increased funding requirements and this resulted in the depletion of the Government Investment Account limiting the scope for any further drawdowns,” said economist Mr Sennye Obuseng.
He said persistent low economic growth resulting from a dip in global demand threatened the ability to generate revenue and achieve the fiscal target of returning to surpluses.
Therefore, the 2023/24 budget ‘should strive to address daily issues affecting ordinary Batswana ranging from extending income and employment support to the most vulnerable as well as service delivery shortcomings’, he said.
With regard to ministerial recurrent budget allocations, Mr Obuseng said he expected the ministries of health and basic education to get the largest and second largest percentages respectively.
“Government should commit to the provision and promotion of health care services to the nation and recent shortage of medicines in hospitals should promptly be attended hence the Ministry of Health should be allocated more funds towards procurement of sufficient medicines,” he said.
Justifying the suggestion of the second largest share for the Ministry of Basic Education, Mr Obuseng said it needed to address poor academic results, orientate learners toward self-sufficiency and empower them.
While he accepted that the country’s economic outlook had improved over the current financial year and promised a balanced budget proposal for 2023/24, another economist, Mr Karabo Letswai, was more cautious.
He predicted that the effects of the Russia/Ukraine conflict would continue to bite with domestic demand likely to remain constrained reflecting the impact of higher borrowing costs on consumers and investors.
Not only did the Russia/Ukraine conflict undermine efforts to sustain post-COVID economic recovery but also “resulted in worldwide spill-overs through commodity markets, trade and financial linkages.
“This has added to inflation pressures, through increased fuel, food and commodity prices, as well as causing a slowdown in growth,” he said.
On the positive side, Mr Letswai noted the economy was estimated to have recorded a surplus of P203 million in the 12 months to March 2022 compared to a deficit of P16.1 billion in the corresponding period the previous year.
“The surplus is mainly attributed to an improvement in the merchandise trade account, underpinned by a surge in diamond exports, which amounted to P74.6 billion in the 12 months to March 2022 compared to P54 billion during the same period in 2021, an increase of approximately 38 per cent,” he said.
Foreign exchange reserves amounted to P54.2 billion as at the end of June 2022, equivalent to 8.8 months of import cover compared to P50.9 billion the previous year, showing an increase of six per cent, he said.
That, Mr Letswai said, was a positive development as it reflected government’s commitment to rebuilding fiscal buffers.
He however said something needed to be done about the Foot and Mouth Disease situation as it had potential to roll back many fiscal achievements.
For his part, Business Botswana president, Mr Gobuamang Keebine pleaded with government to invest in upscaling small, micro and medium enterprises as they were fundamental to employment generation and economic diversification.
He said government should appreciate the importance of the SMME sector in meeting the national development objectives of rapid economic growth, economic independence as well as sustainable development.
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