Budget crisis: The stress of not worrying
Mbongeni Mguni | Wednesday May 21, 2025 13:56


In a popular sitcom from the 1990s, the main character once wrestled with how to handle a crisis. As a deadline approached and the pressure mounted, the character did his best to project confidence. Ultimately, he betrayed the raging panic below the surface:
“The stress of not worrying is starting to get to me,” he said.
In recent months, the nation has seen numerous indicators that a fiscal storm is slowly building in the skies above. From the vast increases in the budget deficit forecasts, to the liquidity crunch now said to be structural in the banking sector, to ever increasing debt-seeking by government – all happening with the US tariffs undermining any possible recovery in diamonds; it has been a difficult period.
Government has been in a scramble for funding, even directly tapping the BPOPF for P3 billion, while running an overdraft at the central bank. Meanwhile, suppliers and vendors are reporting greater delays in invoice settlements, suggesting a cash-flow issue in government.
Besides diamonds, SACU revenues, another key budget income line, are due to come under pressure from the US tariffs, strained relations between Pretoria and Washington DC and the expiry of AGOA in September.
Other fiscal revenue streams such as non-mining tax and Value Added Tax are linked to the performance of both the private sector and consumers, which in turn are linked to government as the main economic actor.
The natural instinct when such facts are shared would be horror, but panic at individual level is also the gateway to more chaos at business enterprise level, at investor level, at bank level and eventually at national level. Panic is what has triggered nearly all the economic crises seen all over the world in the past centuries.
And so, as key signals of a fiscal emergency emerge, many are increasingly feeling the “stress of not worrying”. They are fighting to remain calm.
For its part, the new administration has sought to keep the nation abreast of the challenging fiscal situation, as a way of managing expectations while also ensuring transparency and accountability.
Vice President and Finance Minister, Ndaba Gaolathe, has since his ascension in November last year, been warning of strained public finances, noting right at the start that the situation was “worse than what we had thought”.
More recently, in Washington DC, the Vice President told Bloomberg that drastic measures were required to rein in spending and restore fiscal stability, as the recovery in diamonds was seeming more uncertain.
This week, President Duma Boko, had even more blunt remarks on the current economic reality.
“The reality is that the economic situation of our country, the mainstay of diamonds has several years of not doing well or not doing at all, with a total collapse of the diamond industry over the last three years up to now,” Boko told civil servants in Tsabong. “As we speak, the diamond mining industry is investigating how to cut jobs, slightly over 1,000. “This means that production at your mines has fallen down due to the challenges that diamonds are not being bought. “This means that the source of revenue that we are reliant on for your challenges to be addressed, the inflow is low and in fact it’s not there at all.”
For those tracking the numbers, the current situation is not about the past months. The fiscal crisis now manifesting in reports of government delaying to settle some payments, can be seen as far back as a decade ago, when mineral revenues entered a downward slide.
For those with greyer hairs on their heads, the crisis goes even further back in time to the decade after commercial diamond operations began, when prudent policymakers began advocating for greater economic diversification.
In fact, some scholars argue that diversification as a concept predates the diamond boom of the 1970s, as post-Independence policymakers always targetted a broad, deep economy as seen through legislation such as the Industrial Development Act of 1968.
Long-running challenges such as poor implementation and the menace of corruption and wastage over the years, have also bedevilled the fiscus, while crises as COVID-19 have drained the reserves established to provide a cushion for the difficult times.
The new administration, ushered in by the historic October 30 elections, knows how sensitive the economy has become for Batswana. Analysts agree that a major reason why government changed was the country’s declining economic performance and perceptions of state-scale corruption as well as the emergence of plutocrats.
Critics say the Masisi administration over-promised on the budget, inflated spending plans even in the face of declining revenues and within this expenditure, compromised value for money through public finance wastage and corruption.
Gaolathe’s inaugural budget, covering the 2025-26 financial year, is about P4 billion larger than the last and also contains a tax increase. It also requires heavier borrowing and has far less room for wasteful spending.
In this tighter fiscal space and the benefit of witnessing how the economy tanked the Masisi administration, authorities are acutely aware of the importance of taking the nation into their confidence about the state of public coffers.
Finance Ministry senior policy advisor, Naledi Madala, told a World Bank webinar monitored by Mmegi last week that transparency and accountability were at the heart of the new administration’s effort to restore public trust.
“We have a new government and it has inherited a very constrained fiscal environment, one where even the most basic government functions were getting difficult to sustain,” she said. “Against this situation, there was a decision made to moderately increase taxes on higher income earners and corporates. “It was not taken lightly and it was a very necessary if unpopular first step to restore functionality. “We are very clear-eyed about it because taxation without visible improvement in service delivery will just deepen public frustration and mistrust.”
According to Madala, even in a financial crisis, taxpayers must see that their money is demonstrably and faithfully being utilised.
“To truly shift the vicious circle of low trust, there must be transparency and communication from citizens to know why taxes are going up, how the money will be used and the outcomes they should expect. “That era of fiscal opacity must end and more information must be out there for citizens to make that analysis for themselves. “Even in a tough fiscal situation, there must be progress, whether it’s small movements such as repairing schools, improving other infrastructure or digitising services. “That movement is required for the government to build credibility,” she said.
The present economic circumstances are certainly trying for the nation. Previously sturdy pillars of the economy are under pressure and the safety net of reserves has eroded. With more public statements by the President and others, a clear picture is emerging of the state of public finances.
Is the stress of not worrying getting to you?
Madala says the relationship between the government and citizens has to be built on trust.
“Trust is the cornerstone and you build it by demonstrating. You don’t build it by simply asking them to trust you, but by demonstrating very repeatedly that you are not just about rebalancing books, but about rebuilding the nation. “What comes first is leadership that’s willing to act and explain and deliver.”