Sunday, October 25, 2020

ESP blamed for prolonged budget deficit

The government’s flagship programme, the Economic Stimulus Programme (ESP) has been listed amongst some of the factors that will lead to the government reporting a budget deficit. The government admitted late last week that it is anticipating recording a budget deficit of P6.8 billion during the financial year 2017/18 due to the implementation of the Economic Stimulus Programme (ESP). 

Amongst the major downside risks to the 2017/2018 budget outlook includes the continued slow recovery in the global economy, undiversified government revenue base, and unforeseen emergency expenditures to address water and electricity supply challenges, and natural disasters like drought and outbreak of animal diseases. 

At the same time, the government’s budget strategy paper which was made public at the budget Pitso also forecast that the domestic economy will run a deficit budget for atleast the next three financial years ÔÇô 2017/18, 2018/19 and 2019/2020. The data contained in the paper shows that for the financial years 2018/19, 2019/2020 the economy will record -4.2 and -2.2 percent respectively. 

“The 2017/18 budget outlook projects a budget deficit of P6.8 billion due to a modest anticipated revenues and the implementation of ESP,” the Deputy Permanent Secretary in the Ministry of Finance and Development Planning (MFDP) Kelapile Ndobano said Thursday. 

The Economic Stimulus Programme (ESP) was adopted by government in September 2015 to promote growth, economic diversification and employment creation. Ndobano further said that despite reports and signs that the government budget will be on the red for the next three financial years; the government is still committed to maintain fiscal sustainability in the medium term. 

As a result, Ndobano said at the Budget Pitso government will find ways to trim the planned expenditure or expand the revenue base. “The additional measures to raise domestic revenue or rationalise the planned expenditure during NDP 11 will be considered, if necessary, to maintain fiscal sustainability,” Ndobano said.

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