Despite laudable efforts to apply the brakes on spending by the Umbrella for Democratic Change (UDC) government, there is still a need for the coat to be cut further, to size.
The Minister of Finance this week announced that they had managed to halt government spending by P5.5 billion in the eight months between November 2024 and June of this year.
While this is a welcome development, the problems approaching Botswana’s horizons pour cold water on the efforts. The difference between revenue and expenditure leaves a P5.3 deficit, something that cannot be financed by dipping into reserves as before, showing that the coat still crawls beyond Botswana’s feet.
The UDC government must be well aware that relying on SACU revenues, released at the beginning of every quarter to get by, is not a sustainable fiscal path. The sustained trend of playing chess with payment of salaries every month can lend the country into a crisis. After all, every trickster can suffer the shame of his tricks when they fail.
The measures needed to curtail spending in Botswana have been well articulated by the mission carried out by the International Monetary Fund (IMF). Of the P52 billion expenditure spent between November and June, P23.8 billion was on personal emoluments and pensions, and this is where the bulk of the fat must be cut.
The government needs to rationalise the size of the public sector and align its size with the size of the economy.
In previous years, the government spent over P37 billion on personal emoluments, and close to half of its recurrent budget on paying salaries, an anomaly for a country that aspires to build a fast-growing economy.
The government also needs to curtail spending on bailing out parastatals and prioritise their urgent reform.
Continuous bailouts of entities that have been loss-making for over three years should be met with a review of their business cases to align them to a profitable mandate.
According to a study by the IMF, Botswana’s parastatals pay a wage premium of up to 56% compared to the public and private sectors, an indictment of bloated, top-heavy management structures. Despite this, most SOEs continue to post dismal financial results, with little to no returns in the form of dividends to the government. Instead, they draw repeated bailouts from the national treasury, exposing the economy to fiscal risk.
The 2000 Privatisation Policy and the 2005 Master Plan laid out a strategy for divestiture, outsourcing, and public-private partnerships.
Flagship entities such as the National Development Bank, Air Botswana, and the Botswana Power Corporation were earmarked for reform. Yet, nearly two decades later, implementation remains piecemeal and largely unsuccessful.
“A penny saved is a penny earned”-Benjamin Franklin
