Africa-Press – Botswana. Botswana is currently experiencing a significant decline in revenue inflows resulting in liquidity challenges that threatens financial stability and sustainability of government business operations.
Appearing before the Public Accounts Committee on Monday, the Ministry of Finance Permanent Secretary, Dr Tshokologo Kganetsano cautioned that the trend was pronounced as of April last year and the situation was worsening by the day.
That, he said had compelled the Ministry of Finance to consider several means in order to fund the 2025/2026 budget as part of its core mandate of resource mobilisation.
“We had forecast a deficit of about P22 billion for the current budget year, which was premised on the collection of diamond mineral revenues of around P17 billion but the current situation might lead to the need to revise the figure downwards owing to a decline in diamonds sales,” he said.
Dr Kganetsano indicated that the forecast in revenue was made prior to the American administration tariffs imposition that had a negative impact on the global economic activities. As a result of slowed down cash inflows, he said the Ministry was struggling to pay suppliers’ invoices as the cash balances were below the outstanding invoices to be paid.
On that regard, Dr Kganetsano raised several interventions citing that the Ministry of Finance had since 2024/2025 not allowed ministerial supplementary budget allocations but rather encouraged ministries to implement hostility cost cutting measures.
In an effort to ramp up revenue collection, Dr Kganetsano noted that they would be some initiatives to confront the challenges. This, he said, were in relation to modernisation of legal frameworks, reforms of the local capital markets as well as adoption of innovative financial models.
Further, he said the intent was to present to Parliament the new Tax Administration Act, which aimed to harmonise tax rules in the Value Added Tax and Income Tax acts as well as reducing compliance time for tax payers and eliminate duplication in paying and filing taxes.
“We are also looking at the national payment systems law, which will bring significant positive changes toward enhancing the country’s payment systems,” he said.
To that end, Dr Kganetsano said it was important to implement the national retail payment switch, which would go a long way in promoting financial inclusion and ensuring seamless transactions.
With regard to the domestic economic growth and outlook, he said the economy contracted by three per cent in 2024 compared to a positive growth of 3.2 per cent in 2023. He attributed the economic contraction in 2024 to the prolonged downturn in diamonds market.
“If one looks at the statistics, it is evident that diamonds revenue have been declining and sales have been weak and extremely low as of the beginning of April last year,” he said.
He highlighted that the ministry had previously provided a growth estimate of 3.3 per cent as indicated in the previous budget speech but could nonetheless revise the growth estimates downwards.
“There was a preliminary figure of close to zero per cent growth and the International Monetary Fund has also estimated the country’s focus growth at negative 0.4 per cent, which further illustrates the contraction in economic growth in 2025,” he said.
Dr Kganetsano nonetheless stated that the country was doing well on the inflation front, with inflation well within the 3.6 per cent objective rate.
This, he said had provided an opportunity for the Central Bank through the Monetary Policy Committee to maintain an accommodative monetary policy stance in order to promote economic activities.
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