With estimated total revenues and grants of P58.81 billion and proposed total expenditure and net lending of P66.87 billion for 2018/2019, the government’s bottom line budget deficit will grow up to P8.6 billion, the Budget Strategy Paper (BPS) has shown.
BPS, a fiscal update document prepared by the Ministry of Finance and Economic Development was shared this week at the Budget Pitso and state that a result of slow growth in revenues, coupled with continued expenditure pressures, due to additional budgetary requirements by various government ministries the overall budget balance points to a deficit of P8.06 billion, or minus 4.0 percent of GDP.
Botswana’s two sources of revenue for remain vulnerable to exchange rate fluctuations and international market swings. A sustained weakness of the diamond market in the past few years has seen diamond prices softening while output targets have also been trimmed. Sluggish sentiment in the market has seen global mining giant, De Beers and Botswana’s Okavango Diamond Company (ODC) sales falling by over 20 percent in the first half of 2015. De Beers owns a joint venture ÔÇô Debswana Mining Company with the government of Botswana.
According to the technocrats who prepared the 2018/19 BPS, the largest amount of P19.67 billion, or 33.4 percent of the total revenues expected to be accounted for by mineral revenue. Customs and excise is projected to account for the second largest share of total revenue at P14.00 billion, or 23.8 percent during the 2018/2019 financial year.
“This will be followed by non-mineral income tax at P13.36 billion, or 22.7 percent and Value Added Tax at P8.11 billion, or 13.8 percent of the total. The remaining 6.3 percent of the total revenues expected in the 2018/2019 financial year will come from the Bank of Botswana, as expected earnings on government investment account of the foreign exchange reserves, and “other revenues”, which is mainly property income taxes, fees and grants from donors and development partners”, reads part of the BPS.
Meanwhile, the real gross domestic product (GDP) is projected to grow by 4.7 percent, 5.3 percent and 5.0 percent in 2017, 2018 and 2019, respectively. The positive outlook is attributed to projected improvements in the sectors of: Mining; Trade, Hotels & Restaurants; Transport & Communication, and Water & Electricity. The Mining sector is expected to recover in line with the positive global economic prospects, while the other sectors will continue to benefit from the implementation of the Economic Stimulus Programme adopted by Government to boost growth, and create employment opportunities.