Economy stands at crossroads, economist says
Pauline Dikuelo | Monday February 24, 2025 11:12
Speaking during the Access Bank Botswana 2025–2026 budget review last week, Kgori Capital economist, Kitso Mokhurutshe, said the fiscus must be brought to balance without delay, as continued deficits pose a significant risk to economic resilience.
He said budget surpluses are essential to rebuilding fiscal buffers and ensuring the country can withstand future financial shocks, adding that strengthening revenue collection and broadening the tax base are imperative steps toward this goal. He said targeted tax increases on high earners are a welcome development in fostering a more equitable and sustainable fiscal structure.
“Some efforts have been made to contain spending in the 2025–2026 budget but it is not enough. “The recurrent budget remains stubbornly high, rising by 5.8 percent whilst the development budget was largely contained, rising marginally by 0.7 percent. “Wages, salaries and pensions are the largest expenditure line. “Development expenditure is largely contained despite funding the costly increase in old age pensions from P830 to P1,400, along with P300 payments for all babies,” he said.
Mokhurutshe said reform should occur in structured phases suggesting that the first phase of economic reform must focus on stopping financial haemorrhaging within the government. This requires comprehensive reforms in government systems, including audits of State-Owned Enterprises and major projects to improve transparency and efficiency. Once financial stability is established, the next phase involves preparing for economic take-off.
“Attracting the right type of Foreign Direct Investment is crucial, as is strengthening the country’s export base to reduce reliance on imports and boost revenue. A targeted approach to investment will ensure that Botswana benefits from industries that align with its long-term economic vision,” he said.
Mokhurutshe said the third phase focuses on intangible yet transformative steps, such as advancements in information and communication technology, manufacturing, and healthcare. The successful execution of mega-projects will be vital in driving industrialisation and modernisation, while a shift toward renewable energy, particularly solar power, will play a critical role in Botswana’s energy transformation, ensuring a more sustainable and independent energy future.
He said the final phase envisions the creation of a new Botswana built on long-term macroeconomic stability.
“Expanding key sectors such as tourism and agriculture will be fundamental in diversifying the economy and generating employment opportunities.
“With careful planning, strategic investments, and disciplined fiscal management, Botswana can position itself for sustained economic growth and prosperity.”