Brian Benza
5 June 2009
The government has cut down the development budget for NDP 10 from an initial P63 billion as state coffers feel the effects of the global economic crisis.
Implementation of the NDP 10 should have begun in April, the beginning of the financial year, but was delayed for 12 months because the government was still assessing the extent of the financial crisis.
NDP 10 will now only be debated at the opening of the third meeting of the fifth session of the ninth parliament in July.
In an interview with Business Week, the Acting Permanent Secretary in the Ministry of Finance and Development Planning, Dr Taufila Nyamadzabo, said after re-modelling the likely growth of the economy and factoring in the effects of the recession, the government decided to cut down the development budget, taking into account the forecast rate of rebound of economic activity and expected revenues from both the mineral and non-mineral sectors, SACU, borrowings and bond issues.
"We are currently in the process of identifying which projects are going to be suspended as a result of the crisis," Nyamadzabo said. "We have been in consultations with the different ministries on the projects that are unlikely to go ahead. Once the list is finalised, we will submit it to Cabinet for approval next week.
"We placed a new overall ceiling for the next seven years of NDP 10, a figure that we believe is sustainable, given the changed environment in which we are now operating."Although Nyamadzobo declined to comment on the new figures before Cabinet approval, sources in the ministry said the budget had been cut by about P10 billion, which represents a 16-percent decline.Unlike previous NDPs which spanned five years, NDP10 will be implemented over seven years to coincide with Vision 2016.The 2009/2010 budget implied that the government would cut down on some development projects due to a fall in revenues, although critical projects will go ahead as planned.
Reflecting the decision to drop some development projects, the number of tenders being approved by the Public Procurement and Asset Disposal Board (PPADB) has drastically gone down.
According to PPADB sources, each board sitting was approving an average of 20 tenders last year, while the number has fallen to about five tenders this year.
Nyamadzabo added that some of the projects that the government cannot afford to phase out are those being carried over from NDP9. "We will not discontinue some of the projects that we started in the previous NDP, so right now we are just looking at which new projects to suspend," he said.
Renowned economist and former Bank of Botswana Deputy Governor Keith Jefferis said a fundamental review of government spending was needed regarding both capital projects and on-going programmes, as well as of how decisions on spending are reached.
In a Bifm economic review report, Jefferis says there is a need to restore the ability to make rational choices between competing priorities and demands. "In particular, effective project appraisal techniques should be restored, focusing on cost-benefit analysis and ensuring that public spending is justified in terms of the economic or social returns that it is likely to generate (there is much evidence that money is being spent with little or no quantification of anticipated benefits in relation to costs).
"Public money should only be spent on projects or programmes that can justify themselves in terms of long-term economic benefits (and not short-term economic impact such as construction activity) or social benefits that can be achieved in a cost-effective manner, relative to the number of people benefiting."
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