Tuesday, July 14, 2020

Govt wage bill keep rising…

The Botswana government had to slash its development budget so it can allocate more funds to the public service’s increased wages, according to financial estimates from the country’s finance ministry.

When Dr Thapelo Matsheka, the finance minister, unveiled the budget proposals for the 2020/2021 financial year, it was not immediately clear what will be gobbling much of the budget, other than that the development budget was cut by 30 percent, channelling the funds to recurrent budget. Now, fresh information from the ministry, complete with financial estimates, reveals that most of government’s expenditure will be on salaries and allowances.  

Botswana’s share of the budget spent on wages has been a key concern from developmental partners such as the International Monetary Fund and the World Bank Group, urging the diamond dependent country to reduce the government size and the wage bill. However, with a weak private sector, which itself is dependent on government expenditure, as well as swelling complaints of stagnated wages, the country’s finance ministry found itself drawn in political expediency.

In the past two years, the wage bill has increased by over 20 percent, with much of the increase happening last year. Mokgweetsi Masisi’s administration waltzed to electoral victory in the October 2019 elections after appeasing government workers, bumping their salaries by 10 percent in 2019, just before the elections, with another 6 percent promised this year.

Though the total budget proposal at P67.6 billion is 1 percent lower than the prior year, Matsheka’s recurrent budget is up 8 percent to P55.6 billion, representing 82 percent of the total budget, while the development budget was cut from P17 to P12 billion. The increase of the recurrent budget is down to the government wage bill which has surged by 13 percent, from last year’s P23.5 billion to the proposed P26.6 billion. Based on this, salaries account for 47.9 percent of the recurrent budget, and nearly 40 percent of the total budget.

The law enforcement agencies, together with the education sector, account for more than 50 percent of government wage bill. The most dramatic increase was in the law enforcement agencies after their salary scales were restructured, in addition to the salary increases.

According to the latest estimates from the finance ministry, Botswana Prisons Service’s wages are up by 51 percent to P412.6 million, while Botswana Police Service (BPS) wage bill will increase by 44 percent to P2.2 billion, Botswana Defence Force (BDF) salary expenses will also go up by 32 percent to P3.9 billion. The Directorate on Intelligence and Security Services (DIS) is getting a 11 percent increase to P266 million.

The department of teaching services and management’s wage bill has increased by 13 percent to P5.9 billion.

The increase in the recurrent budget comes at the expense of the development budget, has been criticised by some of the country’s prominent economist, arguing that the government is not efficiently spending its budget in a way that it will stimulate the jobless economy.

Furthermore, government’s increased wage bill has been partly responsible for the country’s massive deficits. From a budget deficit of P8.8 billion in 2018/2019, the government must deal with another P7.9 billion shortfall projected for the current year, while the budget deficit for 2020/2021 financial year will be P5.2 billion.

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