He made the warning when responding to a suggestion from Business Botswana officials to lower corporate taxes so as to stimulate activity in the business environment. However, in his response, the minister said government was rather mulling over pressures to raise corporate taxes in order to bump up revenues for the country. “I doubt that under the current fiscal circumstances it will be good economics to lower corporate taxes under the current circumstances,” Gaolathe said. “Rather there is pressure to increase corporate tax,” he added. Botswana has fiscally been struggling to keep up with the increasing cost of running government coupled with falling revenues, which makes it difficult to finance both the developmental and recurrent budgets.
The Ministry of Finance intends to implement austerity measures in the medium-term, including reducing the civil service wage bill and cutting grants and subventions as a way of slowing down government spending and boost savings. The 2024-25 budget is expected to incur a deficit of up to P18.6 billion, up from the original forecast of P8.7 billion, after mineral revenues, particularly diamond sales plummeted, while spending remained robust. The Government Investment Account (GIA), which is managed by the Bank of Botswana and represents government savings, has fallen to record lows as the Finance ministry has drawn down deeper to finance the widening budget deficit.
