Budget slowdown focuses on the wrong numbers

Lewanika Timothy | Tuesday January 27, 2026 09:16

In line with progressive calls from different Bretton Woods institutions to slow spending and consolidate the fiscus, government has cut headline expenditure but the forgone opportunity appears to be investment in the country’s future.

The cuts suggest government continues to trim investment expenditure while protecting consumption, reinforcing a growth model that prioritises short-term stability over long-term wealth creation.

According to the latest Budget Strategy Paper (BSP) released by the Ministry of Finance on Tuesday, development expenditure has borne the brunt of the slowdown. The opportunity cost is significant delayed infrastructure development, reduced public investment and missed opportunities to crowd-in private capital.

While delivering last year’s estimates, the Minister of Finance, Ndaba Gaolathe, had tabled a development budget of P23.7 billion mainly for infrastructure projects and government investment in key national projects. Revised budget outturn figures show government has slashed this to P13.9 billion representing a P9.8 billion cut.

“In the 2025/26 financial year, total revenue and grants have been revised downward to P68.7 billion from the initial estimate of P75.5 billion. “On the other hand, total expenditure and net lending is projected at P77.9 billion. “The 2025/26 estimates comprise P64.1 billion in recurrent spending, with personnel emoluments remaining the main driver at P36.6 billion. “Development spending is estimated at P13.9 billion,” the BSP revealed.

The figures show an 11.7% forecast drop in recurrent spending versus a 42% fall in development expenditure. The documents also show that forecast revenues for the current fiscal year dropped to P68.7 billion from the initial estimate of P75.5 billion, due largely to lower mineral earnings.

This trend has persisted for years in which fiscal consolidation efforts have repeatedly targeted capital spending while leaving recurrent expenditure largely intact.

Of the forecast P77.9 billion spending in 2025/26, personnel emoluments remain the main driver at P36.6 billion or 47 percent, mainly comprising salaries and emoluments to public servants. The number, analysts say, underlines the bloated size of the public sector and how it weighs down the fiscus.

Recently the International Monetary Fund (IMF) sounded louder alarms over the increasing need for government to channel budget cut efforts towards recurrent expenditure.

IMF researchers, who have cautioned Botswana on the issue for years, expressed familiar concern over government’s inability to set parameter controls over the wage bill, noting that the opportunity cost of not acting is billions of pulas in foregone capital that could otherwise be used for investment or enhanced social spending.

“The wage bill absorbs more than 13 percent of GDP and about 58 percent of total tax revenues, well above levels observed in most peer countries. “Its elevated size reflects both relatively high compensation levels and the large number of public employees. “This has constrained fiscal space for growth-enhancing investment and social spending, while creating rigidities that complicate adjustment during downturns,” researchers noted.

Botswana’s wage bill stands at least 13% of GDP, higher than that of any country in the Southern African region, underscoring the bloated size of the public sector.

Cutting development expenditure may be administratively easier in the short term, but it undermines the very foundations of future growth. Roads, energy infrastructure, water systems, digital connectivity and industrial support programmes are not discretionary luxuries, but rather prerequisites for competitiveness and private sector expansion.

When these investments are postponed or scaled back, the economy’s growth potential is quietly eroded.

Meanwhile, high recurrent spending locks government into a rigid cost structure that is difficult to adjust during downturns. Consumption-driven expenditure supports current incomes but does little to expand the productive base of the economy.

Over time, this imbalance entrenches low growth, weak job creation and continued dependence on government as the primary economic actor.

While it is easy to argue this on paper, government risks the political backlash associated with rationalising the public sector. The move would obviously result in job cuts for overlapping and unnecessary roles but it is these tough decisions that will create space for government to be able to spend capital more productively creating more broad-based wealth avenues.

There is an easier path to cracking this whip without enduring political backlash and that is cracking down on lossmaking parastatals through privatising those with commercial capabilities while reducing operating expenditure for social enterprises that serve the greater good for society. In the short term, priority should be given to analysing the financial situation of SOEs, identifying those that could be privatised, and establishing a single unit responsible for monitoring performance, enhancing governance, and implementing policy and legal reforms.

Botswana’s fiscal challenge is therefore not only about spending less, but about spending better.

Focusing on headline expenditure reductions without addressing the structure of spending, risks delivering fiscal consolidation at the expense of long-term prosperity. The wrong numbers are being prioritised and the economy is paying the price.