Mmegi Online :: Elections could stall budget balancing - Moody’s
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Friday 16 August 2019, 15:05 pm.
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Elections could stall budget balancing - Moody’s

The general elections set for October are likely to delay government’s plans to tighten its budget and erase deficits, leading credit ratings and research agency, Moody’s has said.
By Pauline Dikuelo Fri 18 Jan 2019, 12:15 pm (GMT +2)
Mmegi Online :: Elections could stall budget balancing - Moody’s








While in 2016/17, a surplus of P1.12 billion was recorded, in the years preceding that financial period and after, the budget suffered large deficits. This year, the original forecast deficit of P3.6 billion is due to be higher, up to P5.1 billion due mostly to funding of Debswana mega-projects.

Government’s own projections are that the deficits would be erased by the 2021/22 financial year, with a surplus of P1.6 billion. However, in a research note on sub-Saharan Africa released this week, Moody’s said the elections would come to bear on the timelines for budget consolidation. The credit ratings and research agency said there was a possibility that “spending pressures ahead of elections may delay fiscal consolidation plans” in Botswana.

Governments are traditionally known to loosen national purse strings during and immediately after election years. “Elections will take place in a number of

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sub-Saharan Africa countries, including South Africa, Nigeria, Senegal, Botswana, Namibia, Cameroon, Mozambique in 2019, and Ghana in 2020, potentially raising policy uncertainty and risk of delaying fiscal consolidation.

“Countries experiencing elevated political or social tensions are likely to see spending pressures persisting or increasing. “Ahead of elections in Botswana, the authorities now envisage a more gradual pace of fiscal consolidation while in Namibia, the government will try to prioritise social spending as it continues to pursue gradual fiscal consolidation,” the agency said.

Moody’s said it listed Botswana amongst countries that had limited election-related policy uncertainty, citing the country’s track record of political stability.

The agency added that fiscal consolidation efforts would also be affected by the effect of volatile SACU revenues, particularly as Botswana is still a natural resource-dependent economy.

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