Thursday, June 13, 2024

Gov’t can be bolder in fending off the cost of living crisis  

Botswana has not been immune from the economic headwinds that continue to batter the world.

Just recovering from the devastating Covid, Botswana’s capacity to intervene has been greatly  reduced.

The economy has shed a lot of jobs. The economy lacks dynamism. And any farther stress on it could cause irreparable damage that could further undermine its resilience.

But still Botswana government can surely be bolder than it has been so far.

What is needed is conviction and a desire to be decisive.

We are in a state of economic emergency. And government should act with that in mind.

So far government action has amounted to dithering. And that has not inspired public confidence.

Intervention should be more targeted and have more depth.

This crisis is affecting the people’s ability to get by, especially those that are unemployed, but also those that are employed.

Botswana Government has responded by increasing the allowances of students and extending a lifeboat to Botswana Meat Commission to a total of P120 million.

One would have hoped that in its intervention, government would target the most vulnerable first, like say the unemployed.

Prices of several key household stuff have skyrocketed.

As a result household budgets have been squeezed. The pressures are too much to bear.

Food, fuel, electricity and water are just a few of the things that people are complaining about.

But businesses too are struggling.

They too, like households are in need of an urgent intervention and assistance from the government.

At the moment because of the strain, businesses are not able to plan.

They are consumed by uncertainty. And above all just the need to barely survive.

Botswana government needs to take a long and hard look at all options including loosening down the fiscal rules if that is what it will take. Some things might have to be subsidized, albeit temporarily.

Obviously that has implications on the fiscus. There is no easy way out.

All the suggestions here will over time prove costly.

Of course, in the end we have to be honest to ourselves.

The best solution to the problems has to be economic growth.

That growth should be inclusive and also job-creating.

Public debt has over the recent past increased substantially. But debt in Botswana is regulated by law as a function of the GDP.

We have not yet breached the threshold. So that could be yet another avenue to consider as government ponders the ways to meaningfully address the crisis.

Inflation has had its own impact. As has the predictable response from the Monetary Policy authorities.

There is not a lot of hope in the horizon.

Recession is the word that is on the lips of many people.


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