National Planning Commission resolute on high income target
Lewanika Timothy | Tuesday August 6, 2024 12:00
According to the Commission, the upcoming National Development Plan (NDP) will be a “vehicle that takes the country to greater heights.” Speaking at a stakeholder engagement last week, the Commissioner General, Batho Molomo, revealed that they are aware of worries over the practicality of an HIC dream at a time when the economy is failing to even grow by two percent. He added that the Commission is working on a sectoral target approach to bring the dream to life. “Economic commentary that doubts our ability to achieve the high income status dream is rightly founded on facts that we are all aware of, but as the Commission, we are not giving up. “The National Transformation Strategy will allow the identified sectors to propel us to a fast rate of transformation and growth,” he said.
To reach the status of a high-income economy, Botswana will have to significantly increase its wealth levels, a near doubling in Gross National Income per capita (GNIpc), to reach the World Bank threshold of $13, 205. In 2021, Botswana’s actual GNIpc was $6, 610 and current GDP figures are generally trending downwards quarter-on-quarter as the economy settles deeper into economic stagnation. An International Monetary Fund (IMF) assessment of the local economy, carried out last year, ruled out chances of Botswana’s GDP strengthening in the medium-term.
They cited subdued diamond industry, which will have economic ripple effects over progressive quarters, coupled with a downturn in other sectors such as agriculture, as the reason for the weakness. “The expected slowdown in 2023 reflects a decline in diamond production and prices this year, with weaker global growth likely to depress other exports,” the report reads. “This will be partly offset by growth in the non-mining sector, with the fiscal expansion supporting public investment.” The decline in diamond exports has had a serious impact on government finances, given that income from mineral taxes, royalties, and dividends is usually the largest single source of government revenue.
The culmination of lower mineral revenue, combined with highly expansionary budgets in 2023-2024 and the current 2024-2025 financial year, has had a huge negative impact on the sustainability and implementation of such budgets amidst a year soiled by so many uncertainties. Despite this gruelling, dream daunting challenges, the NPC is confident that diversification will be the silver bullet that propels the country to the HIC target.