Budget cuts planned to push down deficit

In October, the draft Budget Strategy Paper, an annual budget blueprint, had forecast the 2021/22 deficit at P12.6 billion or 5.9% of GDP, above the prescribed fiscal limit of four percent. Each deficit requires additional funding by government but Covid-19 expenditure in the current financial year has left its reserves at the Bank of Botswana at historic lows.

A budget memo that circulated earlier this month indicates that the official deficit will be pushed down from the 5.9% of GDP estimate to below four percent by slashing spending and raising revenues through, among others, increasing Value Added Tax (VAT) and Withholding Tax (WHT) as well as introducing a new sugar tax.