5 February 2018

Botswana: Govt to Manage Deficit

Gaborone — Minister of Finance and Economic Development, Mr Kenneth Matambo has proposed P67.8 billion as total expenditure and net lending for the 2018/19 financial year.

Presenting the budget proposals before parliament yesterday (February 5), Minister Matambo said 66.5 per cent of the total amount, or P45.14 billion was earmarked for recurrent budget, 28.4 per cent or P19.31 billion was for development and the remaining P9.08 billion had been proposed as statutory expenditure.

The minister said the total revenues and grants for 2018/19 budget were estimated at P64.28 billion against an expenditure of P67.8 billion resulting with a deficit of P3.59 billion or 1.8 per cent of GDP.

Talking about revenues and grants, he said mineral revenue, driven mainly by positive performance of diamond exports, accounted for P24.59 billion, or 38.3 per cent of the total amount.

He said Customs and Excise revenue was the second largest contributor at P14.3 billion or 23.1 per cent of the total amount while non-mineral income tax revenue was estimated at P13.36 billion or 20.8 per cent of total revenue.

The minister said Value Added Tax is estimated at P8.11 billion, or 12.6 per cent of the total revenue.

With regard to the statutory expenditure, the minister said the proposed P9.08 billion represented a substantial growth of P2.10 billion over the current year's budget.

He said the proposed budget comprised of Public Debt Service requirements, pensions, gratuities and compensations as well as Salaries and Allowances for specified officers.

Minister Matambo said the growth was also due to the provision of P2 billion for a re-payment of government bond, which matured in the next financial year.

He said despite the deficit, government continued to rein in on expenditure so that the country returned to a sustainable fiscal position in the medium to long term.

To finance the deficits, the minister said the government will be guided by the Medium Term Debt Management Strategy which provides options on the financing of a budget deficit depending on underlying causes of such a deficit.

He said for example, a temporary deficit can be financed through a mix of borrowing and drawing down on Government Investment Account, while a deficit arising from adverse changes in the country's term of trade of significant shock in one of the domestic revenue sources would require adjustment measures to restore stability in the economy.

Minister Matambo said in the government's assessment of the projected budget deficit, it is temporary hence will be financed through a combination of drawing down on existing loans as well as on government cash balances.

Source : BOPA

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