Matambo bullish as growth doubles, deficits narrow
Brian Benza | Tuesday February 7, 2017 15:51
Presenting the 2017/18 budget speech before Parliamentarians, Matambo said Government will again spend more than it collects this year with expenditure, dominated by investments in water, energy, defence, education and the much talked about Economic Stimulus Package (ESP), outweighing revenues.
A P2.5 billion-budget deficit is forecast this year from P1.1 billion in 2016 with investments in utilities and other infrastructure taking the largest chunk of the P59.54 billion expenditure. Revenues is estimated at P57.2 billion this year.
Largely due to an unanticipated boom in diamond revenues, Government managed to reduce the 2016/17-budget deficit from an initial forecast of P6.38 billion to just P1.1 billion.
However, in the financial year that begins in April, Government seems to be slightly more optimistic about trade as Southern African Customs Union (SACU) revenue will overtake diamond income. More money is also expected from tax collections going forward as Matambo says Government is considering proposals from the Taxation Review Committee which include introduction of transfer pricing rules in the income tax act that would curb tax avoidance as well as underscore the alignment of the country’s tax system to international best practice.
On economic growth, Matambo said that economic growth forecast for 2017 is almost double to that of 2016 largely due to the recovery in the mining sector
“The outlook for 2016 is however positive, with the domestic economy expected to recover and record a growth rate of 2.9% for the year, and forecast to reach 4.2% in 2017. The optimistic outlook is based on the anticipated slight improvement in the mining sector, and positive growth prospects for the non-mining sectors.
FNBB Research manager, Moatlhodi Sebabole welcomed the narrowing of the deficits saying it is in line with Botswana’s record of sustainable financial management.
“We have seen a narrowing of the budget deficit in the short to medium term as diamond revenues improve while government seems to be optimistic about trade as well as we see SACU revenue overtaking minerals in 2017. The investments in water energy and other infrastructure is a positive, as this will address the supply side, which was affected by utility shortages in previous years.
The rise in expenditure is enough to support the growth projections but the key will be implementation of these projects,” Sebabole said. The economy contracted by 1.7% in 2015.