It is difficult to figure out what this year's budget seeks to achieve. The fact that the budget did not have a theme was not helpful. Since 1989 when Festus Mogae became the minister of Finance and Development Planning (MFDP)the budget speech carried a theme, a tradition that was continued by the late Baledzi Gaolathe. Although the themes that they chose were almost always lofty the theme helped to focus one's attention around that thread that ran through the speech from start to finish.
Perhaps due to the absence of a theme around which the budget speech was crafted the speech does not have a rallying point to which the nation can latch on to. It is disjointed, incoherent and off-key on a number of subjects.A theme tends to give a budget speech a sense of direction, resolve and resoluteness.Another glaring omission in the budget speech is the complete disregard of Vision 2016. Surely, with only three years left before the twentieth anniversary of the first long term vision for the country the minister should have demonstrated how this budget is a milestone towards realizing Vision 2016.I don't think the omission is an oversight. It is deliberate. To Kenneth Matambo and his team at MFDP Vision 2016 is a pipe dream. He would rather refer to the National Development Plan 10, a document that his ministry coordinated than to a wish list which was written in Alice's Wonderland! By sidelining it he is making a statement, that Vision 2016, with all its noble declarations, is a pie in the sky.
A budget speech should not just be about numbers. It should speak to the aspirations, needs, and anxieties and hopes of the people. A budget is a monetary expression of the government's priorities for the betterment of the quality of life of the people and how they will be met in a sustainable way. The budget speech should put money in the pockets of the people by reducing taxes for low and middle incomes, protecting the most vulnerable by establishing the social safety net on a sustainable footing while delivering greater opportunities for social mobility.A lot has already been said about this year's budget speech in terms of it's strong points and flaws.There is no denying the fact that, whatever shortcomings this budget and the ones before it have, this government punches above it's weight when it comes to fiscal discipline and fiscal management. Fiscal discipline is essential to improve and sustain economic performance, maintain macroeconomic stability, and reduce vulnerabilities.
In recent years, there has been a growing recognition of the budgetary challenges looming ahead for developed and developing countries alike. These arise from such factors as demographic developments which entails the aging of population which will inevitably have profound implications for pensions and health care spending as well as economic growth; the ongoing process of globalization - while bringing some benefits, can create potentially large uncertainty for public revenues by affecting the taxing power of national governments; and global climate change is likely to adversely affect economic performance and the public finances of many countries. These challenges require the pursuit of prudent fiscal policies to create budgetary resources to respond to them.
Ordinarily, it is during good times that many countries become extravagant and before they know it they are hit by a downturn in the economy only to find that they did not build up reserves resulting in an accumulation of fiscal deficits leading to debt which embroils the country in a vicious circle due to interest. Over the years Botswana has been able to build foreign reserves and continues to balance its national budget under very stressful global economic conditions. Perhaps it is an irony that our economic managers have been criticised for being overly cautious to the point that the country missed out on opportunities. Some argue that because of this conservative approach the country did not invest in infrastructure and social services during the past successive years of surpluses.
However, it is this prudence and frugality which have steered Botswana away from embarking on the road to Greece! This year's budget is a continuation of the government's commitment to maintaining macroeconomic stability and entrenching fiscal discipline.Fiscal indiscipline manifests itself in a number of different ways. It is reflected in unrealistic macroeconomic assumptions, most commonly for economic growth, that underlie budgetary policy. The unduly optimistic projections regarding revenues that this gives rise to are often used to respond to unrealistic political demands on the budget. In my view this year's budget has placed into
sharp relief one major adjustment that needs to be made to the current arrangement. And this is that MFDP should be relieved of the development planning function.Many successful developing countries, especially the East Asia "tigers", decided to put in place a central structure responsible for managing their economic development around a well thought through, long term development plan. Such a central planning unit makes detailed assessments of the state of the economy, then draw up plans to improve their economies to specific time-lines, closely monitoring these plans to ensure that implementation remains on schedule. Their task is to speed economic growth, spread prosperity among their people and industrialise in the quickest time possible.
The trend world wide is for the national treasury (ministry of finance) to be focused on what it does best, which is to mobilize and allocate national resources, financial management, and fiscal policy. And this is what MFDP should concentrate on.According to the ministry's website, MFDP's mandate is to "coordinate national development planning, mobilize and prudently manage financial and economic resources". Further, the ministry is responsible for "the formulation of economic policies for sustainable economic development." It states as its core functions the following: Treasury and Budget planning; economic management and national development planning coordination; and financial administration and management.This must change. MFDP should not coordinate national development planning. It's responsibility should be confined to developing and executing government's public finance policy and economic policy. Put differently, MFDP's responsibility should be to coordinate macroeconomic policy and promote the national fiscal framework, as well as manage the budget preparation process and exercise control over the administration of the annual national budget.
Perhaps because of the history of the executive branch of our country MFDP was burdened with many responsibilities. As a result the ministry became too powerful to the extent that it could overrule other ministries willy-nilly. To the extent that the ministry exercises oversight over public spending, and embeds good governance and financial management across government that is fine. But as things stand MFDP is hogging some functions that, ordinarily, belong to other sector ministries.Of course over the last few years some of it's responsibilities have been transferred to line ministries, the latest being coordination of rural development policies and programmes which has since been moved to the ministry of local government. We have also seen the coordination of poverty programmes being moved to Office of the President because MFDP was ineffective in carrying out this assignment.
National development planning should be hived off MFDP and an autonomous planning commission be set up. If the planning function could be removed from MFDP not only would the ministry be more effective in carrying out it's mandate but the all important function of planning would be done more efficiently. This would not reduce the crucial role that the national treasury is playing in the development of the country.A planning commission is an advisory body tasked with the responsibility of formulating development plans, policies and strategies which would ensure accelerated and sustainable development of the country and improvement in the standards of living of the nation. It would be a public sector planning agency autonomous of the MFDP.The main functions of such a commission would be to formulate national development planning strategies and ensure that the strategies including consequential policies and programmes are effectively carried out; prepare broad national development plans; keep under constant review national development plans in the light of prevailing domestic and international economic, social and political conditions and make recommendations for the revision of existing policies and programmes where necessary.
The commission would work closely with sector ministries and departments as well as the district councils in the administration of development including plan preparation. It would be responsible for the planning of national priorities and directing the course of national development. The commission would also be responsible for exploring and allocating resources for economic development as well as work as a central agency for monitoring and evaluation of development plans, policies and programmes. Most importantly, it would provide a platform for exchange of ideas, discussion and consultation pertaining to the economic development of the country.The national planning commission should become the central level institution for monitoring and evaluation of economic development of the country. In addition to being a national planning and programming body, the national planning commission would act as the principal advisor in the economic development and economic affairs of the country. It would be responsible for the planning of national priorities and directing the course of national development.