Budget deficit swings to surplus but...

Mbongeni Mguni | Monday August 14, 2023 06:00

However, the main contributor to this surplus is the underutilisation of the development budget across various ministries, the latest data from the Finance ministry shows.

While higher-than-expected mineral revenues did contribute to the modest surplus for the year, fiscal authorities are particularly concerned about the persistent issue of underspending, despite multiple efforts to enhance project implementation.

Earlier reports from the Finance ministry indicated that by January 31, around 65.4% of the approved P16.4 billion development budget for the 2022–2023 financial year had been expended.

By that date, ministries such as Youth, Sport and Culture, Labour and Home Affairs, as well as the Administration of Justice and Parliament, had utilised less than 20% of their development allocations.

This trend persisted for the remainder of the 2022–2023 financial year, leading Finance Minister Peggy Serame to assert that the unexpected surplus was primarily due to underspending in the development budget. BusinessWeek is informed that out of the P14 billion final development budget for 2022–2023, only P12 billion was utilised by ministries, leaving a balance of P2 billion returned to the Finance Ministry. "Previously, I mentioned that there are often complaints about insufficient development budgets, yet these budgets are not being fully spent, and this year is no exception," Serame commented during the launch of the 2024–2025 budget process in Mochudi on Wednesday.

"This year, I want you to go and ask them about this and get them to respond. “Ask them why they are not spending this money when projects are not moving.” Serame outlined that the consistent underspending of the development budget is predominantly due to inadequate prioritisation, project appraisal and sequencing, poor costing, insufficient monitoring leading to time and cost overruns, and insufficient expertise both in the government and the private sector. "The reasons are many and include delays due to litigation with contractors," she stated.

According to figures shared by Serame, during the initial three months of the 2023–2024 financial year, eight ministries and agencies expended less than one percent of their development budgets. The top performers during this period included the ministries of Local Government, Minerals and Energy, Agriculture, as well as Lands and Water Affairs. The recent revelations from the Ministry of Finance mirror sentiments expressed by prominent economist Keith Jefferis, who also highlighted the ongoing trend of diminishing allocations for the development budget. "In terms of how spending is allocated, there is an increasing share devoted to government wages and salaries and a declining share going to the development budget, which is public investment," Jefferis remarked at a recent business seminar by Bifm. “Even though the share of the budget devoted to public investment has been declining, the development budget has been consistently underspent. “So when ministries tell you there’s no money, don’t believe them.

“They have the money, they just can’t spend it. “But it’s easier to say the problem is with the Ministry of Finance and ‘they are not giving us the money,’ rather than admitting that they are not organised enough to spend the money.” Serame suggested some solutions to address this challenge, including the adoption of a three-stage project appraisal system to enhance implementation, the incorporation of the new development manager model to facilitate better infrastructure project delivery and the enhancement of the Development Project Monitoring System. The ministry is also refining proposed amendments to the Public Finance Management Act, which will empower the minister with more effective recourse in cases of budget underspending and misspending by public officers.