Budget records first surplus in six years
Mbongeni Mguni | Wednesday October 26, 2022 13:47
Figures shared by the Finance ministry this week indicate that the rebound in mining activity, particularly around diamonds, helped the budget recover to a surplus from a steep P16.4 billion deficit in the pandemic-hit 2020–21 financial year.
Initially, fiscal authorities had expected the 2021–22 financial year to produce a P10.2 billion deficit which would have represented 5.09 percent of Gross Domestic Product (GDP). Earlier this year, however, technocrats in the Finance ministry said higher than expected revenues from mining, a pickup in incomes from the Bank of Botswana and underspending in the development budget had helped the fiscal situation.
Debswana, which is 50% owned by government, sold P38.1 billion worth of diamonds in 2021, the highest since 2016, as global demand surged following the COVID-19 restrictions of 2020. State-owned diamond trader, Okavango Diamond Company also reported sales of $963 million P11.5 billion in 2021, an all-time high for the 10-year-old company.
Despite the improvement in government’s finances, authorities still expect the current financial year to produce a P7.7 billion deficit, followed by a narrower P163 million shortfall in 2023–24. The budget is expected to balance in the 2024–25 financial year.
Driving the deficits through the years have been fluctuating mineral and customs revenues, the COVID-19 pandemic and counter-cyclical spending by government to prop up the economy, including across-the-board civil service wage increases.