Fiscal policy
For the first time in many years, the vibrant diamond-dependent Botswana economy posted a budget deficit. Announcing the 2009-2010 budget in February this year, the then Minister of Finance Baledzi Gaolathe termed 2009, the 'year of belt tightening'. In February, just when Debswana was shutting down its mines, Gaolathe announced a P37.79 billion budget against estimated revenues and grants of only P24.39 billion resulting in an unprecedented deficit of over P13 billion. At the time, analysts questioned the highly ambitious budget because of the anticipated 50 percent drop in diamond revenues, which traditionally contributes about 70 percent to the national coffers.
However, government insisted the P10 billion development budget was meant to spur economic growth and employment at a time when everything else seemed to be going down. "While under normal circumstances, a deficit of this magnitude would not be prudent, we must at the same time, recognise that in extraordinary circumstances such as these, a fiscal stimulus to boost growth and employment in the economy is appropriate," Gaolathe said.
