The latest numbers, helped by improvements across most sectors, not only underline an emerging recovery in the economy, but also the depth of the hole it had dropped into. Analysts say a six percent contraction in the economy in any other year would be cause for alarm, but in 2020, following the 24% crash, fiscal authorities will have slight smiles on their faces.
“The improvement in the third quarter GDP, reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to the COVID-19 pandemic,” Statistician General, Burton Mguni wrote in a commentary on the latest GDP numbers.
Baptism of fire
With 2020 marking his first full year in office, Finance Minister Thapelo Matsheka underwent a baptism of fire as he watched his carefully calculated budget figures and growth expectations quickly unravel. In February he announced a budget carrying a P5.2 billion deficit and forecast economic growth of 4.4 percent, and by April, he was warning of a P10.8 billion deficit and economic contraction of up to 13.1%.
The difference was COVID-19, which forced government to close all borders and impose a national lockdown, knocking out key industries such as mining and tourism, while similar measures abroad reduced the demand or pricing of the country’s key export commodities.
The Greater Gaborone area, the country’s key economic hub, would suffer two more lockdowns due to outbreaks of COVID-19 and by July, Matsheka was telling legislators the deficit would be P13.6 billion and economic contraction 8.9 percent.
Government launched a P4 billion COVID-19 Relief Fund, providing a slew of interventions from wage subsidies to tax deferrals, while also leaning on other key stakeholders, such as banks and insurance players to grant relief to businesses and households.
The minister later persuaded the National Assembly to pass the P14.5 billion Economic Recovery and Transformation Plan (ERTP), which government is banking on to tide the economy through the pandemic, while setting it on a new, priority-area footing.
Within that plan, MPs also okayed a P1.3 billion Industry Support Fund designed to bail out the informal sector and existing businesses in specific sectors, while CEDA, the primary agency for citizen entrepreneurship, also launched revised guidelines with higher loan offerings at cheaper rates and more flexible conditions.
