For technocrats in the Finance Ministry, the broader goal in the short-term is to balance the budget, which would be a return to the fiscal stability necessary to continue the country’s sustainable development aspirations. That type of stability has been hard to come by, with the last budget surplus recorded as far back as the 2016-2017 financial year. Government had originally anticipated that the first three years of National Development Plan (NDP) 11, covering the years 2017-2018 to 2019-2020, would carry deficits and the last three, covering the period to March 2023 would first balance, then carry surpluses.
For a range of reasons, NDP11 carried budget deficits of P22 billion for the first three years and by 2020, COVID-19 hit, creating the biggest ever deficit hole the country has had to dig out of. For the 2020-2021 financial year, the budget incurred a record shortfall of P14.5 billion, wiping away the government’s reserves. Finance Ministry documents released this week indicate that for 2021-2022, a P7.2 billion deficit is forecast, which should widen to P8.5 billion in 2022-2023. Prolonged deficits, such as have been occurring in recent years, drain government’s reserves, force it into more and costlier borrowing, while making measures such as tax increases unavoidable. Ratings agencies, whose assessments determine the interest Botswana will have to pay on any external loans it seeks, have been raising the alarm about the prolonged return to fiscal stability.
