Can Matsheka deliver Masisi's promises?
Pauline Dikuelo | Friday January 31, 2020 13:33
The Minister of Finance and Economic Development, Thapelo Matsheka will present the 2019-2020 budget on Monday that will tick off item on the checklist of promises made while on the trail.
Masisi has previously said he expects to see some of his campaign promises reflected in the budget. He also said it was fortunate that the election outcome came as the budget was being prepared, so certain promises may be fulfilled.
Experts have already predicted that the budget would unlikely involve an increase in government spending in 2020-2021 in order to keep the fiscal deficit under control.
The economy has been incurring the running deficits since the start of the National Development Plan 11 in the 2017-2018 financial year. Since that year, the running deficits have cumulatively totalled P16.1 billion, excluding the shortfall forecast for the current fiscal year.
Last December Matsheka revised the projected deficit for this fiscal year upwards, from P7.3 billion to P7.8 billion. Fiscal authorities also forecast a P6.9 billion deficit for 2020-2021 representing -3.1 percent of the gross domestic product (GDP). The 2020-2021 deficit will be attributable to flat mineral revenues and a high civil service wage bill. These figures are subject to change, the authorities caution, and the likelihood is that they could worsen.
However, the Ministry’s senior policy advisor said the numbers would be further tuned as the impact of the slump in diamond sales becomes clearer.
This financial year will mark the start of the second half of the NDP 11 period.
Econsult Botswana analysts say challenges face the new government in 2020. The fiscal situation is quite challenging with reduced mineral revenues due to diamond market weakness combined with increased expenditures following the substantial public sector pay rise spread over 2019 and 2020.
This will have an inevitable impact on the availability of funds for development (capital projects at the time when expectations for new projects are high following the 2019 general elections, the Econsult analysts say.
The budget and mid-term review for NDP 11 will need to focus on the delivery of public services and the need to dramatically improve value for money in the public sector to minimise the need to raise taxes to balance the budget.
“There have not yet been enough reforms to the business environment to jumpstart private sector growth or attract significantly more foreign investment. In the mining sector, there will be little scope to increase diamond production in 2020 given high levels of inventory held by De Beers as a result of weak sales in 2019.”
According to Econsult, economic development locally has been held back by an inefficient, wasteful and in parts, obstructive public sector. The government sector is huge and impacts on almost all aspects of daily life and economic activity. It is also in need of urgent reform to introduce much greater accountability and to ensure that it discharges its mandates efficiently.