Friday, July 12, 2024

Economic Stimulus Package: No need to be over excited yet

Listening to Botswana Democratic Party Secretary Botsalo Ntuane and former legislature, Dumelang Saleshando’s debate on Duma Fm regarding the recently announced Economic Stimulus Package (ESP) Thursday night brought more questions than answers. 

For those who missed it, throughout this week, apart from the Eritrean debate, our people continued to talk much about this ‘big animal’ called Economic Stimulus Package. First announced by the President Ian Khama at the ruling party (BDP) special congress held in Gaborone over the weekend, the program we been told is meant to ‘stimulate’ the domestic economy. According to the president, the program will target tourism development, agricultural production, construction and manufacturing. That’s all we know. As to how much is going to be used, from when to when, no one knows yet. So perhaps in the meantime there is no need to be over excited as yet. This is so because even leading independent economists have come out to say it is difficult to review the economic stimulus package at this stage.

What is important to highlight though is that the announcement comes after government slashed its 2015 growth forecast from 4.9 percent to 2.6 percent in September, saying the country will post a budget deficit this year. Diamonds account for around 75 percent of our foreign exchange earnings and 30 percent of GDP, but gem demand has slowed since late 2014 as middlemen who buy rough stones struggle with a stronger dollar and liquidity problems. Available figures show that the value of rough diamond exports from our mines fell 15 percent in the first six months of the year.”We have realised our economy is going to stagnate,” Khama said in a speech televised late Sunday. “The time has come for us to make bold decisions and implement these new projects that will boost our economy. But that doesn’t mean we are going to be reckless” ÔÇô The last part of the statement is consoling, we got admit. But beautiful as we are meant to believe the package is, we should not make our people believe that with this programme, the government has come up with an answer that spreads pixie dust and will make everything OK. That’s just not the case. We ought to face our people and tell them that the days when our economy would grow by between seven and nine percent on the back of diamond sales are gone ÔÇô maybe even for good. Our economy is currently on a gridlock, so for us as a nation the real problem therefore becomes that, with this stimulus package, we might be crowding out what we need — an ultimate private enterprises recovery — by doing enormous amounts of government spending to artificially prop up the domestic economy. Let us make no bones about it; this ESP will create economic growth temporarily. But it will only be a false recovery, and it could be followed by a possible second slow growth. With no ammunition left, what will the government do then? Mind you, we are not insinuating that an economic stimulus package cannot be successful if implemented with proper provisions. The underlying questions at the moment however relate to the provisions of this package.  From where we stand, it is not immediately clear how much money Government intends to draw from the reserves for the intended purposes of ‘jerking the economy’. More importantly, it is not immediately clear how far down that road the Government will be prepared to travel if intended results do not come around as quick as they should. While using the Reserves is likely to breathe life back into the domestic economy, such an instrument is also a high risk gamble.

We read from the BusinessWeekly newspaper on Friday that Kenneth Matambo, a custodian of the public finances cannot offer more light. He told that paper that his team at Finance Ministry is still putting together the details of the project. His right hand man, Dr Taufila Nyamadzabo is reported to have been as clueless as his boss and could not add meat to the bone that the BDP secretary General Botsalo Ntuane talked about on Duma Fm on Thursday night. So if indeed there is a disconnection between the executives at Finance Ministry and the BDP executives, whom are said to be the newly appointed “monitors” of the implementation of the ‘package’ then the program is as good as Sir Seretse Khama International Airport or National Stadium, if anyone knows what we talking about. As a custodian of tax payers’ money who is not only privileged to be a BDP member but also an economist, Matambo should be at the forefront of this stimulus package. He should be able to give answers to questions from the ordinary men on the streets which are usually channeled through the media. It is unfortunate that when the BusinessWeekly newspaper tried to seek further explanation on the matter on behalf of the nation  a special elected Matambo rather chose to shut the door…”Go write what you want”, so he said according to the newspaper reporter Keabetswe Newel. Government spokesperson, Dr Jeff Ramsey is said to have confirmed that the program has been an ongoing initiative and that the committee steering it has long been set up. Why then, if Matambo, whom we expect to be part of that committee shutting out journalists and by extension the nation when all they want to hear is simply the modalities of this so called stimulus package? Whatever made Matambo not to give answers when called upon by the nation to do so, the #Bottomline remains that until he takes it to the podium, and share finer details of this stimulus package with the entire nation, not a small number of people in university hall like President Khama did, the ESP shall remain nothing but a “talk show”. 


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