Tuesday, October 27, 2020

Highlights from the national budget

Finance and development minister Kenneth Matambo on Monday gave his sixth budget speech. Here is a look at what is expected for the coming financial year as captured by The Telegraph Reporter, VICTOR BAATWENG.

Economic growth

Matambo says despite continued uncertainty over the global economic recovery, the outlook for the domestic economy remains positive. Real GDP is estimated to have grown by 5.2 percent in 2014, and forecast to grow at a slower rate of 4.9 percent in 2015. Such positive growth is mainly driven by the non-mining sectors including Trade, Hotels & Restaurants, Finance and Banking, and Social & Personal Services. Furthermore, activities such as increased diamond cutting and polishing; establishment in Selebi-Phikwe of the Steel Manufacturing Plant, and the Horticulture Agro-Processing Plant which is expected to be commissioned in the first quarter of 2015/2016; and the rolling out of the postal and banking services to the rural areas are expected to contribute to the growth of the non-mining sectors in the future. These sectors in turn, are expected to contribute to growth and economic diversification, thus creating employment opportunities, and empowering citizens.

Employment Creation

The minister mentioned ‘unemployment’ more often and also admitting that it is giving the government a headache. He however could not say how the government would go about solving the problem. Although there was no specific mention on the rate at which the jobless rate will fall, Matambo said the government’s wish is to attain job creation by ‘economic growth’. He noted that an inclusive growth approach is premised on gainful employment of factors of production, especially labour.

Matambo indicated that the current unemployment rate of 19.8 percent therefore represents underutilisation of one of the country’s important resource, namely our human capital. “This is a challenge for the country; especially that it affects the youth. It is for this reason that Government will continue to implement various programmes, projects and strategies geared towards assisting the youth and women to improve their livelihood.”

As a result Matambo says this year’s development budget of P12.93 billion which will mainly be spent on infrastructure projects such as construction of new schools, new power transmission lines and water pipelines, is expected to go a long way in creating new employment opportunities. The minister said in addition, complementary laws, labour laws such as the Employment Act, Trade Disputes Act, Workers’ Compensation Act and Trade Unions and Employers’ Organisations Act will be reviewed to facilitate harmonious industrial relations and also to make the labour relations environment conducive for investment.

Domestic Inflation

Figures from the government Statistics agency indicate that the domestic inflation rose from 4.1 percent in December 2013 to 4.6 percent in August 2014, and has since declined to 3.8 percent in December 2014, remaining within the Bank of Botswana’s objective range of 3-6 percent.

As a result, Matambo says the projected external price developments and lower forecasts for oil prices will result in moderate pressure on domestic prices. Therefore, inflation is expected to remain within the Bank’s objective range in the medium term.

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