Analysts speak on the budget

| Friday February 5, 2010 00:00

Gao Seleka-SekonopoFincraft, Chief Investmnent Officer

'Against the backdrop of Botswana's share of the SACU revenue pool, expected drop in royalties, dividends and mineral taxes for the year and other non-mineral income taxes; total government revenue will take a dip materially.

'However, given the fact that Government has a fiscal rule that ensures that total government expenditure be capped at 40% of GDP in order to enable economic sustainability, we anticipate the Ministry of Finance to limit the current government expenditure within the parameters of that fiscal rule without digressing from it in any way.

'In our view, the only corner that we foresee the Ministry reverting to in the upcoming budget to strike a working balance, is to enforce very tight cost/expenditure controls across all Ministries particularly those expenses of a recurrent nature.  So far as the developmental budget goes, we anticipate a major focus on prioritising key projects that offer better enhancement of value to the nature, with non-prioritised developmental projects deferred to the future when the global and local economy swing back on an uptick.  That is just the only way to ride the low economic wave - developmental projects will have to compete for the available resources.  I believe we are going to hear a lot about cost control and operating efficiencies in this upcoming budget.'

Keith JefferisChairman of BIFM Investment Committee'The size of the budget deficit in 2010/11 needs to be reduced from 2009/10; in our view, anything higher than P10 billion - around 10 percent of GDP - is unlikely to be consistent with a sustainable fiscal outlook.

'Achieving this will require cuts in recurrent spending, a zero (or very low) pay rise for civil servants, possible tax increases and the deferral or cancellation of development projects. There also needs to be a binding commitment not to resort to supplementary budgets during the fiscal year - if some high priority individual budgets run short of funds during the year, they should be financed by moving funds from other, lower priority activities, not by increasing overall spending.'

Kathy O'ConnellLegae Investors, Managing Director'Billions of Pula have been sent abroad for investment purposes and those countries are enjoying the benefits, but opportunities can be created here especially in infrastructure. Those funds, coming from pension funds and other sources, could return and develop our industry and economy, such that government would have more revenue and thus be able to provide more services either subsidised or free such as primary education.'

Gary  Juma Analyst Motswedi SecuritiesThe 2009 Budget Speech stated that, '...there will be belt-tightening measures in government, all aimed at improving efficiency in spending.

'We Project a deficit of around 12 percent of GDP to be announced by the minister while  some spending cuts especially in recurrent expenditure to maintain a sustainable budget should also be anticipated.

'Again we believe  there will be no salary increases for civil servants while of some development projects based on prioritisation and cost benefit analysis will be deferred.

As already  announced we also expect SACU revenues to fall while government should enact  more  of Public Sector reforms to promote efficiency. Lastly, I would expect more reforms to boost private sector contribution to GDP growth while Ipelegeng Programmes should  continue but at a smaller scale.'