Diamond sales took a nosedive as sightholders were unable to fly into Botswana to make purchases. Unbudgeted for expenditure on fighting COVID-19 spiralled the budget deficit out of control, leaving the government scrambling to find a way to finance expenditure as revenues from taxes and diamonds plummeted. Unemployment crept up even higher as the State of Emergency (SOE) tried to reduce formal sector retrenchments. But at this same time, the internationally good news about vaccine development was being announced and so we walked into 2021, cautious but hopeful.
The year started with the Budget Speech 2021-2022 bemoaning the message that business as usual as a country was no longer viable. Whilst the budget expected growth to return (forecasted at 8.7 percent growth for 2021) and the budget deficit to be reduced, it still proved to be a sombre budget. The balance between recurrent and development spending continued to skew towards the former (a bad thing), public sector salaries continued to grow towards unsustainability (15% of GDP) and the budget deficit continued to prove to be a challenge to finance. Government planned to borrow on the local bond market which ended up proving to not be as easy as hoped due to asymmetric expectations between investors and the Ministry of Finance (and Economic Development).
