Before the ink has dried on the budget proposals made two weeks ago, Minister of Finance and Development Planning, Baledzi Gaolathe yesterday announced in Parliament that he is working towards trimming down the 2009 budget that stands at P38 billion.

He holds the 'world recession' responsible for his latest undertaking. In his earlier proposals, the minister had made P27.36 billion available for recurrent expenditure, allocating P10.56 billion for development.

Gaolathe wants to slash expenditure on both development projects and the recurrent budget. He was presenting the budget of the Ministry of Finance.

The minister said they are also reviewing NDP 10 projects in the light of new information gathered over the past few weeks about the magnitude of the world recession.

Gaolathe said in light of this, the limited funds available for development projects for the first few years of NDP 10 must focus on those with the highest real returns in terms of social and economic payoff.

He said to accomplish this, a joint task force in his ministry, the Government Implementation and Coordinating Office (GICO), is at work sifting through which projects contained in the current draft of NFDP 10 should be moved to the front of the line for the first few years.

He said the projects must be prioritised to have a much higher impact on poverty reduction and real economic growth.

Gaolathe told Parliament that the largest economies of the world, which also account for a substantial portion of the world consumer market for diamonds, have clearly started to shrink at a rate that is unprecedented since the early 1930s. Gaolathe said industrial production in major economies is falling even faster, at minus 20.6 percent in Japan, minus 7.8 percent in the US and minus 7.7 percent in the Euro area.

"We are hopeful that the substantial stimulus by the major industrial countries will help turn things around. However, we must also recognise that we are not facing a normal business cycle, and it may take several years for the world economy to recover to its former levels," Gaolathe said.