A brave but difficult budget

Editor | Wednesday February 10, 2010 00:00

We all knew it was going to be a difficult budget. Even the super optimist did not expect much from this budget. Our economy and the economy of the world are still reeling from recession. Signs of recovery are very slow and far between.

This will without doubt go down as a very brave budget. In the midst of many expectations and problems, the minister decided not to award any salary increase to public servants - for the second time in two successive years.

The biggest blow, which will continue to be a talking point for a long time, is the introduction of a two percent value added tax (VAT). The effect of this increase in VAT is that the cost of goods and services will now be considerably higher.

Put differently, people will now be paying more for the same goods and services come April 2010. Life will get extremely tough for the ordinary consumer should business people decide to hike the prices of commodities in the aftermath of Matambo's budget.

Increased VAT will definitely erode people's purchasing power. With limited power comes limited credit worthiness and that could easily mean there will be less money circulating in our economy. Economic distress could lead to very little industrial activity unless government comes up with other ways of stimulating the economy and this can only be done when more players are involved - that is by putting money into the hands of the consumers.

Not many people would fault the minister of Finance for coming up with the difficult decision to impose VAT. In the circumstances, VAT seems to be the most reliable devil that government can employ in order to try to finance the budget deficit. With mineral revenues having diminished it appears Batswana were left with very limited choices other than to adopt drastic and desperate measures. While this will bite hard on us, it appears it is the only choice that we had to take.

Government now has a duty to ensure that after all these monies have been collected the funds must be used for the public good. It will be unpardonable to subject the people to hardships through exorbitant taxes only for the money to end up in the pockets of some corrupt officials.

Government must be ruthless in ensuring that collection and accountability of public funds is meticulously done otherwise the public will lose faith in this endeavour as a fair attempt to try to balance the national budget.

We,  however, take solace from the fact that government is committed to delivering on development projects such as bringing power and water to the people despite the crippling financial constraints. It is important that we all stay focused on our roadmap even in the face of these extreme challenges.

                                                      Today's thought                                    'An obstacle is often a stepping stone.'                                                          - Prescott