The 2009/10 expansionary fiscal budget has been described as the one that buys short term relief and not long term solutions for the current financial crisis afflicting global economies.
Economist Keith Jefferis, who always differs with other commentators, told FNBB post budget briefing early this week that he will ‘rather not be complacent’ about the budget.
“This budget is buying short term relief and not a long term solution. It addresses financial crisis in the short term and not the long term macro economic growth,” he said.
Jefferis told the briefing that there is little evidence of belt tightening from the budget apart from a freeze in civil servants salary increases.
“The budget is misleading because it projects Botswana as immune to credit crunch,” he added.
He said the budget has no room for maneuver under the current financial crisis. Jefferis’ views differ from those of other commentators.
The Chief Executive Officer of Stockbrokers Botswana (SBB), Geoffrey Bakwena, thinks the budget is a good one.
He told Btv: “Spending on the ongoing projects has been increased. One would have thought it will be scaled down. It is a good budget to stimulate the economy.”
Meanwhile, Ettienne Le Roux, Chief Economist at Rand Merchant Bank (SA) said the financial crisis, which has started affecting SADC exports, is expected to bottom late 2009 while slow recovery will begin in 2010.
He said the world has to be patient of the stimulus packages governments around the world (especially US) have initiated adding that there is no evidence the stimulus has started working although he said ‘it will eventually find traction’.
He said for the stimulus to bear fruit, there must be stability in the property market and stock markets and corporates starting to borrow again while there should be money supply to the real economy.
“This is not happening: the velocity of the money in circulation is falling. Unless that happens, nothing will happen in the stimulus,” Le Roux said.
“The outlook in 2009 is not rosy. It is going to be a significant downturn like that one of 1989,” the Rand Merchant Bank economist observed.