Gov�t seen funding ESP off-budget
Brian Benza | Friday January 29, 2016 18:00
According to draft budget estimates for the 2016/17 financial year passed onto BusinessWeek, recurrent expenditure will be flat at around P44 billion while the development budget will be a mere P2 billion higher, largely to a P1.3 billion rise in the budget for the Ministry of Defence, Justice and security.
Funding for the ESP, which mostly comprises construction of houses, roads, schools and hospitals, would have been expected to fall within the development budget.
The Budget Strategy Paper (BSP) released in September last year, a month before the pronouncement of the ESP, estimated government expenditures for the 2016/17 year to total 55.74 billion, from P55.72 billion in 2015/16, an increase of 3.6 percent.
Of this, recurrent expenditure was projected to account for P42.83 billion, while development budget is projected to be P12.98 billion.
But the 2016/17 budget estimates show that the total budget expenditure rise will be lukewarm with recurrent budget sitting at P44 billion and the development budget at P14 billion.
“Although minister Matambo had said details of the ESP will be availed in the budget, new reports coming through point to the package being an off-budget event.
“This means he might announce it during the budget speech but it will be some sort of special fund. If this happens, this would be a gross deviation from the prudent public finance management that Botswana is known for as accountability of a “special fund” is very limited,” said a source within the banking industry.
Government has previously said the ESP will be financed by savings held in the Government Investment Account (GIA) at the Bank of Botswana
As part of the package, government has invited construction companies registered with the Public Procurement and Asset Disposal Board (PPADB) to express interest in carrying out infrastructure projects under the ESP, for buildings, electrical and mechanical works across the country.
Building infrastructure projects, which form the portfolio of the ESP are spread across a number of sectors and the services sought will amongst others include Engineering and Building Works, for construction of roads, schools, hospitals and associated infrastructure.
Private sector representative body, Business Botswana believes that while the ESP will jumpstart the flagging economy; a long-term solution still needs to be found for a sustainable growth pattern.
“It is our hope that the ESP, will like any other stimulus measure, bring economic relief in the short term but not necessarily in the long run. In the long run, the economy needs to undergo structural reforms to boost productivity and global competitiveness. Such reforms include improving the business environment and skills development in order to raise productivity and become globally competitive,” said acting CEO Dichaba Molobe.
While expenditure will remain largely flat, revenues are likely to go down for the next financial year largely due to the downturn in the diamond market.
From a P4 billion-budget deficit estimated for the 2015/16 financial years, government envisages a deficit of P50.6 million, which is minus 0.03 percent of GDP.
Matambo will deliver the 2016/2017 budget speech on Monday