Stimulus budget at P3.6bn so far
Brian Benza | Friday February 5, 2016 18:00
The programme, which is expected to run for a three-year period until 2019, has seen P1.4 billion budgeted for the 2015/2016 financial year under a fast track programme, while a further P2.2 billion has been allocated for the 2016/2017 financial year.
Secretary for Economic and Financial Policy, Taufila Nyamadzabo told BusinessWeek that from the P1.4 billion allocated for the current financial year, most of the funds have not been spent as projects had to go through the normal tendering processes before implementation.
“It was just an allocation. For the money to be spent, we have to go through tenders and this is the part we have tried to fast-track.
About P2.2 billion has been set-aside for the next financial period. Next year, the National Strategy Office (NSO), which is coordinating this programme will give us further indication of how many more projects to be implemented and how much money they need for the next two financial years up to 2018/2019,” he said. With economic growth slashed to one percent in 2015 from 3.2 percent the previous year, Nyamadzabo said the ESP is aimed at supporting domestic economic activities in the short term, while providing foundation for a sustainable growth path for the economy in the long-term through investment in infrastructural development.
On the back of an expected recovery in the global economy coupled with the impact of the stimulus package, a modest recovery in the domestic economy is expected in 2016 and 2017, with growth rates projected at 4.2 percent and 4.3 percent respectively.
“We have seen diamond sales starting to recover and other indicators as well point to a recovery in the economy this year. We have always targeted a growth of around 5 percent. Hopefully the impact of the ESP will drive us back to the 4 to 5 percent economic growth range,” he said.
Government’s growth forecasts are well above analysts’ estimates with the IMF seeing Botswana growing by 2.6 percent this year while renowned economist Keith Jefferis predicts a 2.1 percent growth rate.
“I see government growth targets as being a little bit too optimistic. My growth estimates are 0% for 2015 and 2.1% for 2016,” said Jefferis.
In an economic review report Jefferis, said with the evident revenue shortfalls, and large defence spending commitments coming up, it is likely that significant additional funding for the ESP might come in later budgets.
“Much of the ESP is related to infrastructure spending, and such projects need time to be prepared for implementation. Hence, the ESP should be seen as a medium-term programme, rather than short-term spending boost and additional spending may follow in later budget years,” he said.
Presenting the budget estimates before parliamentarians, finance minister, Kenneth Matambo said revenues are seen at P48.4 billion in 2016 against expenditures of P54.44 billion resulting in a P6 billion shortfall.
The deficit is expected to be financed from domestic and foreign borrowings coupled with drawing down of savings, which stood at P35 billion as at December 2015.
The projected deficit follows another P4 billion shortfall in the 2015/2016 financial years taking the two-year cumulative deficit to P10 billion, which is equal to a third of government financial savings.
This year, budget deficit was largely a result of lower revenues rather than increased expenditure.
According to Nyamadzabo, both mineral and SACU revenues are expected to fall this year with the former falling from P18.29 billion to P17.03 billion while the later is seen reducing from P15.46 billion to P11.78 billion.
“SACU revenues will drop 24 percent this year and the trend is set to continue in the near future. “The strengthening pula against the rand in the recent period implies less revenue for Botswana.
“On the other hand, SACU revenue pool also remain a function of GDP of members states and intra-SACU imports the prevailing slowing GDP in the region implies, lower imports which affect customs and excise receipts for all member states,” said Nyamadzabo.