An expected weighty jump in non-mineral taxes is seen narrowing next year’s budget deficit to 0.03 percent of Gross Domestic Product (GDP) from a projected 2.6 percent shortfall this year.
In a revised 2016-2017 Budget Strategy Paper (BSP) released yesterday, the Ministry of Finance and Development Planning said the proposed budget for 2016-2017 financial year projects total revenues and grants to reach P55.69 billion, an increase of 3.1 percent from the 2015-2016 original budget estimates of P54 billion.
Non-mineral revenue is projected to record the highest growth of 10.4 percent to P10.32 billion.
On the other hand, total expenditure and net lending is projected to reach P55.74 billion in 2016-2017, from P55.72 billion in 2015-2016, an increase of 3.6 percent.
“Therefore, the proposed budget for financial year 2016-2017 envisages a deficit of P50.6 million, which is minus 0.03 percent of GDP, which is more or less a balance budget.
“This significant growth rate of the non-mineral revenue is encouraging since it reflects possible success of our diversification efforts,” reads the paper.
Non-mineral revenues include levies and taxes such as corporate, VAT and income.
Last month, the ministry halved the 2015 growth forecast to 2.6 due on expected weakness in the diamond market.
At the time, government also announced the revision of the 2015 budget balance from a previous estimated surplus of P1.23 billion or 0.8 percent of GDP to a deficit of P4.03 billion or 2.61 percent of GDP.
Although the ministry did not provide details of what contributed to the fall in revenues, a back of the envelope calculation by BusinessWeek shows that customs and excise’s contribution to the fiscus is now expected to fall by over P3 billion in 2015-2016.
Calculations show that customs revenue will this year drop from the original estimate of P16.34 billion (29.5 percent of GDP) to P13.75 (26.6 percent of GDP).
Custom revenues for Botswana are earned through revenue sharing formulae among the SACU states.
Apart from a consecutive three-year period of deficits up to 2012 sparked by the 2008 financial crisis, Botswana has consistently posted budget surpluses adding credence to the country’s achievement of the best credit rating in Africa.