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Deficit reaches P2.4bn at fiscal year halfway point

MBONGENI MGUNI
Public finances continued to be weak in the first half of the 2019/20 fiscal year, recording a cumulative deficit of P2.4 billion as revenues fell and spending rose

Finance and Economic Development ministry statistics published by the Bank of Botswana this week show that while the first quarter of 2019/20 enjoyed a P2.2 billion surplus, the second quarter sank to a P4.5 billion shortfall, resulting in the cumulative deficit of P2.4 billion.

The numbers indicate that over the two quarters, revenues amounted to P30.5 billion while expenditure reached P32.9 billion. The game changer between the quarters was a once-off P4.3 billion windfall received by government from the central bank as residual income in April 2019 which helped the first quarter to a surplus.

In the second quarter, however, spending rose 20% to about P18 billion on higher recurrent and development expenditure, while the removal of the windfall from the equation meant revenues were flat quarter on quarter.

Tax revenues, which include mineral royalties, dividends and taxes, rose from P12.5 billion the first quarter to P12.9

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billion in the second, while recurrent and development spending rose by P1.4 and P1.6 billion respectively over the same period. The cumulative deficit at the halfway point of the fiscal year was funded from local sources through government debt issuance programme.

The deficit is also in line with the total P7.8 billion shortfall the finance ministry has projected for 2018/19.

The ministry recently said with more deficits amounting to P11.1 billion forecast for the years remaining in NDP 11, tough measures would be required to restore fiscal stability. “We need new sources of revenue and if it means increasing our tax rates, let it be so. Even in terms of the ranges, we are the lowest in the income tax and VAT.

“There’s scope for us to look at that but advice will be welcome,” finance ministry deputy permanent secretary, Kelapile Ndubano said last week.



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