Gaolathe and his technocrats are hammering out a tough 2025-26 budget, which is expected to carry an P11.4 billion deficit. The current financial year, which ends on March 31, is expected to show a shortfall of P18.6 billion, higher than even the COVID-19-hit year of 2020-21, which produced a P16.4 billion deficit. Speaking at a Budget Pitso held for Local Authorities on Friday, Gaolathe, who is also the Finance minister, said government’s focus was on prioritising its spending to both reduce expenditure and foster growth. “As we move forward, we need to recognise and prioritise fiscal consolidation plans that effectively support the broader goals of economic growth, diversification, sustainability and progress for all,” he told the gathering. “The core of this agenda is our determined efforts to rebuild our fiscal buffers and establish robust spending management and practices,” he noted.
Late in December, the Vice President told a youth Budget Pitso that going forward government would have to reduce the civil service wage bill and also cut grants and subventions to local authorities and parastatals, as a way of slowing down government spending and boosting savings. He also said government intended to boost domestic resource mobilisation efforts, an effort that usually includes broadening the tax base and tightening revenue collections, while also enhancing spending discipline and seeking new engines of economic growth.
In his address, Gaolathe said the measures were needed to protect the fiscus and the country from entering a debt crisis. “These measures are essential for long-term sustainability, our public finances and our nation’s economic future. “They are also required to shield our economy from future shocks and to mitigate the risks of unsustainable public debt. The government will need to prioritise more domestic resource mobilisation and boost revenue growth by identifying alternative revenue sources. “In parallel, we will focus on developing sustainable financial assets to restore the Government Investment Account to robust levels capable of effectively cushioning future economic shocks,” he said. He added: “Our journey ahead will be challenging, thata, but it will also have great opportunities.”
Speaking earlier at the Pitso, Walter Matekane, the ministry’s director of macroeconomic policy, said the ongoing flooding in some parts of the country was a reminder of the shocks that need the country to rebuild its fiscal reserves. He said the ministry, together with local authorities, needed to own the difficult decisions required going forward to restore stability in the budget. “We have to save whatever little that we can so that if there are disasters like these floods, we must have the funds for that. “We have to revamp the economy, close leakages from wastage and corruption and this coming year, the budget should show how the new administration will do the things that have to be done to make this Botswana a better Botswana,” he said.
Responding to the ministry’s presentations, officials from various Local Authorities suggested revenue pathways such as road tolling and a crackdown on those businesses and individuals who are evading taxes. “Government needs to fix the law that collects tax because there are many foreigners with shops who are not swiping or giving out receipts and instead want e-wallets and Orange Money in order to avoid tax. That’s where the money is,” said Atamelang Thaga, chairperson of the Serowe District Council. Councils pleaded with government not to cut grants, noting that the majority of Batswana were struggling financially, while the development needs, particularly in rural areas, still required massive amounts of capital.
