Saturday, July 11, 2020

Economist explains why Botswana’s high expenditure is not good

BY PORTIA NKANI

Baclays Bank Botswana economist – Naledi Madala has once gain expressed concern about the country’s high recurrent expenditure.

Despite the level of the recurrent expenditure, Madala says the government’s development spending has lagged on it’s a target which she said is a concern.

“There is fiscal gap widest between financial year 2018/19 and 2019/20, but government projects higher revenues to close gap in 2020/21.”, Mdala said at the banker’s economic review session held in the capital Gaborone last week.

Madala previously noted that if the government manages to achieve its expenditure targets, “we could see a reversal in the declining trend. That said, it is imperative that development spending be prioritized rather than recurrent expenditure. Additionally with 2019 being an election year, we will most likely see higher government expenditure as well.”

Mdala said at the time that the downside risk to the bank’s optimism is that fiscal consolidation remains a top government priority, and therefore government could lower development expenditure to meet targets as seen last year which would curb government spending.

In addition to Madala’s views, as the country draws near to the election year 2019, there is hope that the consumption patterns will pick, even though the government is walking on a tight budget and has to be prudent with spending.

This week Madala said that the country’s GDP growth broadly remains in line with the Bank’s expectations in 2018.

The latest statistics show that recovery in the mining sector shifted from -11.1 percent in 2017 to 7.4 percent in 2018 that supported the stronger growth in the year, where Agriculture also expanded by a healthy 2.9 percent compared with 2.2 percent in 2017.  Growth in the Trade, Hotels & Restaurants sector moderated from 9 percent in 2017 to 3.2 percent, which was unexpected, as data earlier in the year pointed to a strong recovery in consumer spending.

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Sunday Standard July 5 – 11

Digital copy of Sunday Standard issue of July 5 - 11, 2020.