EU grants Botswana P250M for budget support

Staff Writer
The European Union (EU) has given Botswana P250 million (26.6 million Euros) to finance short-term Fluctuations in Export Earnings (FLEX), Monitor Business has learnt.

The money came under an agreement between Botswana and the EU for the allocation of supplementary development funds.  Speaking at the signing ceremony in Gaborone last week, the Minister of Finance and Development Planning, Kenneth Matambo, said

FLEX would safeguard socio-economic reforms and policies that could be affected negatively as a result of a drop in revenue emanating from the 2009 financial and economic crises.

Matambo said Botswana was yet to recover from the 2009 economic recession and that Botswana's major economic mainstay, diamond sales, had declined.

"Botswana is a mineral export-based economy and during the 2010 period, diamond sales decreased dramatically as a result of the world economic and financial crisis," he said. It was for this reason that the European Union was extending additional funds to Botswana. "These funds are intended to contribute to the goals of National Development Plan 10 (NDP 10) by strengthening human resource development and supporting public sector reforms," Matambo said.

The Head of the European Union delegation to Botswana and SADC, Ambassador Gerard McGovern, explained that the supplementary grants would support the government's economic diversification drive through their integration into the ongoing Botswana-EU human resource development programme.

"This large programme has the objective to increase access to and quality of education and to align better labour demand and supply qualifications in Botswana," McGovern said.

He added that the funds would also provide specific technical assistance

to strengthen the education system and to underpin large and comprehensive on-going public finance management reform programmes at the finance ministry.

McGovern said the decision to allocate additional funds to Botswana was taken by the EU and its member states following the financial and economic crisis that started in 2009 and severely hit Botswana and the world economy.

"We have taken good note of the approved budget 2012-2013 which reflects the priority given to macro-economic stability by the Government of Botswana and which is the best guarantee for sustainable development," he said.

He added that the funds were blended with the government's own budgetary resources in the interests of streamlined management and control. "We do it in this way to reduce transaction costs for government but also because we have confidence in the country's public finance management system."Botswana has under the 10th European Development Fund (2008-2013) received an allocation of 83.5 million euros. The current 26.68 million euros brings the total amount of support to 110.18 million euros.

The EU and Sub-Saharan Africa, the Caribbean and Pacific countries have signed a 20-year trade and development assistance agreement that runs to 2020 known as the Cotonou Agreement.

The agreement features support to a broad spectrum of social and economic goals in the partner countries. For Botswana, it mainly covers education, health, small enterprise development, civil society and community-based programmes.




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