Monday, July 4, 2022

Economists forecast budget 2014/15 prospects

The 2014/15 national budget to be announced in February is expected make some serious strategic choices.

The budget comes at a time when there is only one year left to the end of Millennium Development Goals period, and two years to Botswana’s long term vision, Vision 2016.

To achieve these key national goals, economists want the biggest chunk to be spent on human resource development aspects, technology and infrastructure advancement areas which are believed to be fundamental to attaining the central goals.

Over the years government has struggled with limited budget resources, to attain more mileage in addressing the key Vision 2016 goals, the NDP 10 goals which are not so far as well as the Millennium Development Goals.

However, the general feeling is that the budget will not be much different from the recent budgets in terms of allocations. Meanwhile the government has set out four priorities for the 2014/15. These are completion of on-going projects and existing infrastructure; accelerating poverty eradication programmes, Promoting economic growth, and improving public service delivery.

Economic think tank Business Monitoring International (BMI) in their 2014 report noted that it does not expect the FY2014/2015 budget to diverge much from the government’s prearranged course of fiscal prudence as they are forecasting another small fiscal surplus equivalent to 0.2 percent of GDP.

Experts expect another budget surplus for 2014/15, albeit smaller mainly due to continued fiscal discipline and expected small increases in both tax and non tax revenue.

Thabelo Nemaorani, an economist with Econsult said he expects the budget speech to report an out-turn of a slight surplus for the fiscal year 2012/13.

“Inversely, I expect revised estimates of a P1.20 billion budget deficit for the fiscal year 2013/14, instead of the P779.00 million budget surplus initially budgeted. This would be attributable to the estimated P1.98 billion supplementary budget tabled before parliament in December 2013,” said Nemaorani.

Meanwhile the budget strategy paper asserts that there will be an estimated P3.00 billion budget surplus for 2014/15.

The 2014/15 Budget Strategy Paper states that accelerating poverty eradication programmes would be one of government priorities during the 2014/15 fiscal year.

Moreover, Nemaorani said he expects the government to try and bolster the non-mining private sector (NMPS) as it is slowing. Data from Statistics Botswana show that NMPS growth has slowed down to 4.6 percent during the year to September 2013, compared to 10.0 percent during the year to September 2012.

“This would be particularly important so as to expand Government revenue,” he added.

He said though the external risks still prevails, especially in Europe, the outlook is positive. “The global rough diamond market has recovered and Botswana’s mining sector has just went back to experiencing positive growth, 11.0 percent during the year to September 2013, this will increase Government revenue realised from the mining sector,” said Nemaorani.

Garry Juma, an analyst with Motswedi Securities, said revenue inflows from SACU are expected to drop marginally.

As such it is his expectation that the budget increase focus on expanding the country’s revenue base especially non-mining income tax in the wake of the expected decline in mining and SACU revenues which together contributes over 50 percent towards the Botswana’s GDP.

Government spending expected to be maintained below 30 percent of GDP as the country’s continues with its fiscal discipline. It is Juma’s anticipation for Government to increase focus on the merging and privatization of selected parastatals to improve efficiency.

Owing to the fact that national elections are imminent the budget is anticipated to provide for more social safety nets this means money spent on your ISPAADS, Backyard Gardening and Tirelo Sechaba.
Dr Grace Tabengwa, Research Fellow and Macroeconomist, said acceleration of poverty eradication programmes such as destitution allowances, school feeding programs and other programs aimed at the vulnerable groups of society. The Ipelegeng program must continue.

“Programmes that I expect to receive priority in the 2014 budget support are those of poverty eradication and addressing poverty challenges given that it is among the national challenges and priorities for development. The programmes that support youth development would also form a priority in the allocation of resources given that unemployment especially among youth remains a challenge too,” she said.

Tabengwa said her expectations are thus for continued infrastructure maintenance and support for ongoing projects and activities that support the business reform process to solidify the nations diversification drive.

“This is key for attracting foreign direct investment and further growth and revenue prospects needed to support the fiscal stance. I believe that infrastructure aspects of power, water in the relevant sectors would be given priority in the resources allocations as well to support production to boost growth prospects and also offer a supportive environment to the private business sectors,” she said.

She added that expectations are that the budget would still remain focused on restraint to promote sustainability and perhaps build some savings.

“Important issues that should continue to attract prominence also include attaining efficiency across the public and private sector to enhance productivity and competitiveness,” she said.

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