GABORONE, BOTSWANA — Botswana government says it is concerned that the widening budget deficit would make authorities tighten spending supervision next year and beyond, owing largely to slow growth in revenues and higher budgetary requirements by ministries.
A budget blueprint for the 2018/19 budget produced at least three months before the Budget Speech in February 2018 shows the diamonds and beef rich SADC landlocked country with estimated population of 2 million people, is likely to run an estimated P 8 billion budget deficit, if the government does not exercise budgetary controls for the period and beyond.
“The latest revisions of the budget point to a deficit of P6.6 billion due by March 2018, while the 2016-2017 budget is now projected to turn a small surplus from the initial expectation of a P1.1 billion”, Budget Strategy Paper revealed this week, presented for the first time to authorities ahead of the final draft by Cabinet this December reflected.
Finance and Economic Development Kenneth Matambo said at the presentation of the budget paper that while the government had anticipated running budget deficits for the first three financial years of NDP 11, the steep fall to P8 billion has rattled fiscal authorities.
“The 2018-2019 budget will be the second under NDP 11, which ends in March 2023. The forecast deficit for the next financial year is equal to minus four percent of the gross domestic product (GDP). We have agreed as government that as long as we don’t go beyond that four percent of the GDP, we should be comfortable, but once we are beyond that, we would be very, very worried,” Matambo disclosed to stakeholders.
The estimates are produced annually at least three months before the Budget Speech which comes every February, and is usually discussed at three meetings before final ministerial feedback and submission of the proposed budget to Cabinet in December.
Matambo said government was concerned about the widening budget deficits and would tighten spending supervision next year and beyond, with hope that as preparations for the next budget are rolling, the estimated P 8 billion would come down a bit.
He said the government will fund the deficit through domestic and external borrowings, as well as drawdown on foreign reserves, which by June 2017 were pegged at P74.7 billion. The portion of the reserves available to government equalled P30.6 billion by June.
Meanwhile a positive outlook is anticipated in the medium term, underpinned by growth in the services sector which is expected to reach 4.7% in 2017 and 5.3% in 2018.