According to Serame’s proposals, the 2024-25 budget should see revenues of P93.6 billion set against expected expenditure of P102.3 billion – the highest spending ever proposed in a single budget in the country’s history. The figures point to a forecast deficit of about P8.7 billion or nearly minus three percent of GDP, the highest budget shortfall since the COVID year of 2020.
Serame however said the “stimulus” budget was necessary to drive the country towards its high-income economy target, while also pushing other national priorities outlined in the RESET and Reclaim agenda.
“These offer the greatest opportunity to fundamentally reshape the country’s development trajectory,” she said in Parliament. “I am confident that the proposed budget allocations will once again be an anchor for a people-centred and transformational spending plan with immense potential for stimulating growth and creating job opportunities.”
The forecast spending comes even as Serame acknowledged risks to diamond revenues this year, stemming from uncertain economic growth in key markets and the Group of Seven’s decision to route global diamonds into Antwerp for certification, as part of sanctions against Russia.
The planned boost in spending also represents a significant increase from the estimates in the September Budget Strategy Paper which forecast total 2024-25 spending of P88.8 billion or more than 15% lower than the expenditure proposed by Serame today.
The expected P8.7 billion deficit for 2024-25 is also significantly higher than the P5.1 billion projected in September. The deficit will be funded via “moderate” drawdowns on government’s savings, as well as borrowings from the local capital market, including the issuance of new types of bonds.
Serame said government remained committed to fiscal sustainability and spending efficiencies, despite the growth in the proposed budget.
“Though the budget proposals point to a relatively expansionary fiscal stance, this does not amount to abandoning our time-tested tradition of responsible planning and budgeting that underscores affordability as well as spending restraint. “Therefore, our commitment to fiscal consolidation remains, and will continue to be guided by sound macroeconomic and fiscal policy,” she said.
Serame added: “Let me reiterate that, despite the expansionary budget with an overall balance in deficit, government will strengthen fiscal sustainability measures by maximising domestic revenue collection as well as curb expenditure growth and leakages, while addressing overall spending inefficiencies.”
The P102.3 billion in spending includes P72.6 billion under the recurrent budget and a mammoth P29.8 billion for development expenditure, much of which is being channelled towards infrastructure. Serame said the allocation for infrastructure development was being increased by 33.5% compared to the 2023-24 budget.
“Through this budget, government aims to propel the implementation of projects to unlock opportunities for sustainable jobs, improving the quality of life, reducing poverty, eliminating gross inequalities and ultimately achieve a high-income status,” Serame said. “To this end, a substantial amount of the budget has been allocated to infrastructure development given its role in promoting economic growth and facilitating participation of the private sector.”
Infrastructure spending in the coming financial year will largely be on on-going projects such as roads, water, rail and ICT and others. The new Temo Letlotlo agricultural inputs programme will receive the bulk of the Agriculture Ministry’s P2 billion development budget allocation.
Grab a copy of Mmegi this Friday for a more detailed analysis of the budget and its allocations
