Government has reduced the amount of subventions to certain parastatals on a case by case basis, as part of its ongoing efforts to contain costs amid the country's worst cash squeeze.
Annually, some of the eleven commercial public enterprises and the public institutions, receive subventions from government's recurrent expenditure to support their operations. While parastatals such as the Botswana Development Corporation have been the pick of the crop annually for government, others such as the Botswana Telecommunications Corporation have vacillated over the years, while some such as Air Botswana have recorded running losses.
Yesterday, Finance and Development Planning Minister, Kenneth Matambo said on a case by case basis, subventions to some parastatals had been revised downwards, as government attempts to limit its expenses.
"The fact that less resources were given to the parastatals through subventions is due to the fact that government is facing budgetary constraints; some of them will receive less than they received before.
"However, it is not as though we cut subventions across the board by, say, ten percent. We looked at their requests on a case by case basis and revised downwards those we thought we could.
"It's not a question of having reduced what they were getting last year and this time giving them less. It's like with the ministries which have presented their own requests to the Ministry
Matambo said government's decision to enforce a rule entitling it to 25 percent of parastatals' profits was consistent with its efforts to raise revenue. He denied that the reduction in subventions and the profit rule, would put parastatals to their knees."It's quite in order. We are saying 25 percent of the profits you make should come to government; if you are making a loss, there's nothing to contribute, but if it's a profit, we are saying 25 percent of it must be transferred. "The need for them to pay is a way of raising resources because the P12.1 billion in development budget needs to be financed as well," he said.
Matambo briefed heads of the eleven commercial parastatals on Monday, detailing the constraints government faces and discussing the entities challenges. The Minister said the majority of parastatal heads "appreciated," government's cash situation and realised the urgent need to "do the best with what they have."