Govt targets 6% budget deficit

Staff Writer
Government is targeting to cut the national budget deficit to P6 billion in the next financial year (2011/12) from this year's estimated P12 billion as it aims to achieve a balanced budget in the next two years.

The cut translates into six percent of GDP.

After posting deficits since 2008 due to the global economic crisis, Botswana now aims to match its revenues with expenditure by the financial year 2012/13

In an interview on the sidelines of the inaugural Budget Pitso in Gaborone yesterday, the Secretary for Economic and Financial Policy Dr Taufila Nyamadzabo said for the next budget, the government aims to have a ceiling of P6 billion in deficit as revenues improve and expenditure is curtailed. The next national budget will be announced by the Minister of Finance and Development Planning in February next year.

"We have set ourselves a target of a six percent budget deficit which we believe is a realistic figure that should be able to catapult us to a balanced budget by the year 2012/13," Nyamadzabo said.

"On the revenue side, diamond revenues are improving while income from taxes such as VAT is increasing. On the expenditure side, we have decided to prioritise our expenses in an effort to contain the high expenditure bill, which is unsustainable."

Coming from a budget surplus in 2007/08, the figure slipped into a deficit of P4.69 billion in 20008/09 and increased to P9.5 billion in the 2009/10 financial year and P12, 118 billion in the current year.

The projected P6 billion deficit is expected to be financed from domestic sources as Government has nearly exhausted its external debt statutory limit of 20 percent of GDP.

"Although we have set a P6 billion target, we believe the figure could be lower than that as there is going to be an improvement in the quality of expenditure," Nyamadzabo continued. "Any growth in recurrent expenditure should be critical, well thought out and justified.

"The development budget should, as a first

priority, be allocated to completing ongoing projects. Where priorities have changed, it should be clear which projects would be forfeited or suspended."

Officially opening the pitso, the Minister of Finance and Development Planning, Kenneth Matambo, said the conference marked the beginning of consultation in the preparation of the 2011/12 budgets.

"Concerns have been raised by both the general public and other stakeholders such as Members of Parliament on aspects such as the relevance of budget themes in achieving annual objectives, the length of the budget speech and limited consultation by the government," he said.

"We have looked at these concerns closely and agree that they warrant a review of the budget preparation process, particularly the consultation mechanism." Yesterday's pitso came at a time when Botswana was this week downgraded in the Open Budget Index (OBI) that evaluates the quantity and quality of information available to the public in national budget documents every two years by the International Budget Partnership. According to a survey conducted among 94 countries using a standardised questionnaire, Botswana has been slipping down OBI rankings because of its lack of adequate information dissemination to the public and better performances by other countries.

The 2010 OBI saw Botswana slip down from 65 percent in 2006, 62 percent in 2008 and 51 percent this year.

lthough Botswana's score is among the highest in the region, it trails South Africa's 92 percent, suggesting that the southern African neighbours are far ahead in terms of openness in their budget processes.

Although Botswana produces most of the key budget documents, some of them, such as the Pre-budget Statement, the Mid-Year Review and the In-Year Report are not made available to the public, resulting in the country's fall in rankings.



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